Buying a stock is deceptively easy, but purchasing the right stock at the right time without a proven strategy is incredibly hard. So what are the best Robinhood stocks to buy now or put on a watchlist?
At the moment, Google parent Alphabet (GOOGL), Starbucks (SBUX) and Facebook (FB) are standout performers. Unlike GameStop (GME), which has been hitting the headlines of late, these stocks offer a mix of solid fundamental and technical performance.
Best Robinhood Stocks To Buy: The Crucial Ingredients
There are thousands of stocks trading on the NYSE and Nasdaq. But to generate big gains you have to find the very best. The best Robinhood stocks for investors will be those that offer a mix of earnings and stock market performance.
The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.
The Market Is Key When Buying Robinhood Stocks
A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.
The Dow Jones, S&P 500 and Russell 2000 have have pulled back from highs, but the current market uptrend remains intact. Many stocks benefiting from the economy reopening are breaking out or setting up. The Nasdaq and many growth stocks still have work to do, though the tech-heavy index made up some ground in the past week.
With the market back in an uptrend, it is now a good time for investors to consider putting their money to work. However it is important to exercise a degree of caution due to the split nature of the rally at the moment. Be sure to buy fundamentally strong stocks passing valid buy points. The stocks featured below are potential candidates.
Best Robinhood Stocks To Buy Or Watch
Now let’s look at Google stock, Starbucks stock and Facebook stock in more detail. An important consideration is that these stocks are solid from a fundamental perspective, while institutional ownership is also strong. They are also part of the Robinhood Top 100 Stocks, the platform’s most popular stocks among traders.
Google parent Alphabet is near a buy point of 2,145.24, as a three-weeks-tight pattern has now evolved into a flat base, according to MarketSmith chart analysis. The entry is just above the mid-February all-time high.
Google stock has been trading around its 21-day exponential moving average, and is just above its rising 10-week line.
The relative strength line for GOOGL stock is near a record high, though it has been showing signs of weakness in recent sessions. This gauges a stock’s performance compared to the S&P 500.
GOOGL stock has a very strong IBD Composite Rating of 94. That puts it in the top 6% of stocks tracked overall. Earnings outshine stock market performance, with its EPS Rating a top notch 93.
Earnings have grown by an average of 10% over the past three years, below the 25% sought by CAN SLIM investors. However Analysts see strong growth ahead, with EPS expected to jump 32% in 2021, and then grow by a further 17% in 2022.
The tech giant has a Relative Strength Rating of 63. That means it has outperformed 63% of stocks tracked over the past 12 months in terms of price performance. Recent performance is strong, with Google stock rising by around 15% so far in 2021.
Google stock should benefit from a rebound in digital advertising as coronavirus vaccinations expand. Stock buybacks are another bright spot. Cloud computing holds promise, but remains an unprofitable business for Alphabet for now.
In recent years, Google stock has only slightly outpaced the S&P 500, but that outperformance has picked up in recent months, as its RS line shows. Google has done exceptionally well vs. many tech stocks over the past few weeks.
Last month the firm reported fourth-quarter earnings and revenue that crushed estimates as its core search advertising business rebounded. Cloud computing revenue topped views, though high investment prevented it from being a profitable enterprise.
“Cloud businesses scale, so revenue/booking trends will matter,” Morgan Stanley analyst Brian Nowak said in a report to clients.
And while operating margins for the Google cloud computing business came in much lower than analyst estimates, Bank of America analyst Justin Post was upbeat.
“We think new cloud disclosure suggests optimism on margin trajectory, and we see a potential $10 billion profit improvement over the next five years using Amazon margins as a target,” Post said in a research note.
Starbucks stock is just below two points after previously briefly breaking out of a flat base. Last Monday, SBUX stock reclaimed its 107.85 flat-base entry. On Tuesday, shares topped a 110.57 alternate-entry or add-on buy point. But Starbucks stock fell the three days, undercutting both buy points on Thursday, then dipping below its 21-day line on Friday.
It previously found support at its 50-day line, but has been dipping towards the key benchmark once more.
Starbucks stock has more than doubled on its coronavirus crash lows. There is plenty of room for continued gains, as its RS Rating of 53 puts it in just the top 47% of stocks in terms of market performance.
Earnings have been badly hit by the coronavirus pandemic. This has caused its EPS Rating slip to just 32 out of 99. This should improve as the economy reopens following the Covid-19 lockdowns.
Big money is backing the stock, but its Accumulation/Distribution Rating has slipped slightly to C-. This represents slightly more selling than buying among institutions over the past 13 weeks.
In total, 32% of Starbucks stock is held by funds. Notable holders include the Fidelity Contrafund (FCNKX). This rates as one of the very best funds, according to IBD research.
In the most recent quarter, reported Jan. 26, the coffee giant reported mixed fiscal Q1 results and gave weak Q2 views despite a forecast for China same-store sales to nearly double.
Starbucks reiterated its fiscal 2021 guidance for EPS of $2.70-$2.90 on revenue of $28 billion-$29 billion. Analysts see EPS of $2.80 on revenue of $28.35 billion.
Wall Street expects earnings for Starbucks stock to rise by 144% in 2021, and by a further 22% in 2022. These estimates have been getting revised upwards.
CFO Patrick Grismer, who stepped down Feb. 1, said he expected U.S. same-store sales to recover by the end of Starbucks’ fiscal Q2. Locations in China, he said, had experienced a “more disciplined recovery” than in the U.S. But he said restrictions on international travel curtailed demand.
Starbucks last year announced plans to expedite the rollout of its Pickup stores formats as well as the closure of hundreds of existing stores. The chain also has invested more in digital and drive-thru orders in recent years, bets that paid off during the pandemic.
Facebook stock has passed a 286.89 early entry in heavy volume. It is also looking to break past a 304.77 official buy point.
FB stock is pulling away from the 50-day moving average, which is a positive. But it also wouldn’t be a surprise for FB stock to pull back after surging 8.1% last week and 12.6% so far this month.
The RS line looks to be spiking once more. This is encouraging, as it had been on the decline from early November until mid-January, and moving choppily since then.
Facebook stock has a Composite Rating of 92. At the moment its earnings performance is the clear standout feature, with stock market performance lagging. Its fortunes are improving on this score however. with the stock gaining almost 13% over the past four weeks.
Its EPS Rating of 93 is very strong, with earnings growing by an average of 54% over the past three quarters.
Facebook stock is a big favorite among institutional investors, with 47% of its stock currently held by funds. Its Accumulation/Distribution Rating sits at B+. This represents moderate-to-heavy buying among institutions.
Facebook stock popped on March 20 after CEO Mark Zuckerberg changed his tune on a new user privacy update from Apple (AAPL) during in an interview with social networking app Clubhouse.
“The reality is that I’m confident that we’re gonna be able to manage through that situation well and we’ll be in a good position,” Zuckerberg said. “I think it’s possible that we may even be in a stronger position if Apple’s changes encourage more businesses to conduct commerce on our platforms.”
The Facebook chief has been battling with Apple over the iOS 14 operating system update for Apple iPhone and iPad. There are concerns it could hurt Facebook’s personalized advertising approach.
Every iPhone and iPad has a unique identifier called the IDFA. The upcoming iOS 14 update from Apple allows users to disable an app’s ability to track their activities.
But Facebook and others that sell mobile advertisements rely on this ID to help target ads to users. Advertising accounts for about 98% of Facebook revenue.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
YOU MAY ALSO LIKE:
These Are The 5 Best Stocks To Buy And Watch Now
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Find The Latest Stocks Hitting Buy Zones With MarketSmith
This Is The Ultimate Warren Buffett Stock: But Should You Buy It?
Five Stocks Near Buy Points In Split Market Rally