Robinhood (NASDAQ:HOOD) is a platform that offers a vast selection of equities for purchase. Pretty much anything an investor could want is available for purchase through Robinhood. In that sense, it isn’t much different from any other platform.
So, the best Robinhood stocks to buy are essentially the best stocks to buy period. But if we look at trades that are trending on Robinhood, then it’s a bit different. We can whittle that down further, as well. That’s what I’ve done here. I have chosen what I believe are the seven best stocks among the 20 most popular assets on Robinhood.
Without further ado, here they are:
|Ford Motor Company
|Meta Platforms, Inc.
|Lucid Group, Inc.
Best Robinhood Stocks: Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) stock is currently the most popular choice on the Robinhood platform. I have to agree, it’s a strong choice no matter which platform investors purchase it from.
There are multiple reasons that Microsoft is a strong choice. For one, influential analysts, including Wedbush’s Daniel Ives, see it as a secular winner within tech. The long-term outlook that favors Microsoft is its cloud offering, Azure, and the notions that favor the cloud haven’t dimmed. That’s why Ives has identified it among his secular winners within the tech sector.
Personally, I like Microsoft because it’s relatively cheap right now. Its current price-to-earnings (P/E) ratio of 26.77 isn’t much higher than that of the S&P 500 presently, at 19.16. Investors should understand that Microsoft’s P/E ratio was as high as it is now throughout 2019. Investors likely won’t continue to consider MSFT stock as being overpriced for long.
Investors are judging whether it makes sense to buy Walmart (NYSE:WMT) stock currently. I’d side with Robinhood investors who have it among their top 20 picks right now. On the one hand, Walmart’s share prices fell off a cliff in mid-May when earnings showed that rising costs were eating into its profitability. It still trades in the same range a month-and-a-half later.
Walmart did well throughout the Covid-19 pandemic and was able to absorb pierce increases while maintaining steady earnings beats. That changed in the first quarter of 2022 as the world’s largest retailer missed earnings per share (EPS) targets that averaged $1.48, posting an EPS of $1.30.
It seems that Robinhood investors are buying into Walmart’s reputation as one of the most recession-proof stocks there is. I’d argue that is smart and the worse things get, the better WMT stock should perform.
Best Robinhood Stocks: Apple (AAPL)
Apple (NASDAQ:AAPL) stock is simply one of the best choices in the market. Share prices have hovered around the $130 level for more than a month and I don’t think they’re going any lower. For one, Apple’s P/E ratio of 22.1 is very close to that of the S&P 500 overall. The difference is that the overall S&P 500 doesn’t have nearly as much potential to move upward.
Tech is down, but it will return as a major mover of the markets. When it does, Apple will surge upward and all of its detractors will be left behind.
For the investor willing to take a long-term perspective, right now is a great time to buy AAPL stock. It has provided 22.19% annual returns over the past decade. The company has already let it be known that it will slow during the current quarter. But after that, it should be right back on track. Investors who put their money in a decade ago have seen it multiply by a factor of greater than seven.
If we continue with the idea of 10-year performance, Ford (NYSE:F) stock wouldn’t be high on many investors’ lists. It has provided relatively measly 5.79% returns over the same period. So, $1,000 invested a decade ago would have only grown to $1,755 today.
But the argument in favor of Ford is not about the past and instead relies on the future. It’s really about the transition toward an electric future and what that should mean for F stock. Right now, Ford has a relatively modest electric vehicle (EV) lineup and a low P/E ratio that is below 4. That P/E ratio signals that investors aren’t interested in paying for high multiples of company earnings.
But, as EV sales increase, that should change. Ford has watched as EV stocks have benefited from very high valuations. That has proven to the firm that it can benefit from a more heavily EV-dominated lineup.
Best Robinhood Stocks: Meta Platforms (META)
The argument in favor of purchasing Meta Platforms (NASDAQ:META) stock in July is this: Even though profit forecasts don’t look too high, its inherent value remains high.
What I mean is this: Monness Crespi Hardt analyst Brian White was recently critical of the business and dropped his target price from $300 to $250 in the process. After praising the firm for its strong position in digital ads, the metaverse, and stock repurchases, he highlighted many of the broader knocks, stating “However, the economy appears to be on the brink of a recession, regulatory headwinds persist, equity markets are in turmoil, and we expect the geopolitical landscape will grow more treacherous.”
That notion led him to assert that current revenue estimates for the quarter and year are overstated and to drop his target price to $250. In other words, META stock has massive upside from its current price near $170 even after accounting for downward revised guidance.
Add to that questions about valuation that suggest LCID stock should trade lower than it does based on 2023 sales projections, and the case becomes bleaker. The argument is that Lucid simply doesn’t deserve to trade for more than eight times 2023 sales while the average EV firm trades for approximately 2.6x 2023 sales.
The author of that article rightly points out that Saudi backing differentiates Lucid from its peers who lack access to such deep-pocketed backers. But also consider that Lucid is coming directly for Tesla (NASDAQ:TSLA). That’s a different market than any of the other competitors. In fact, Lucid’s top-of-the-line vehicles are even pricier than Tesla’s. Luxury combined with EV technology means those valuations are likely accurate.
Best Robinhood Stocks: Nvidia (NVDA)
Investors who are going to buy into Nvidia (NASDAQ:NVDA) stock currently believe it is oversold. It’s no secret that chipmaker stocks and tech stocks at large have taken a beating. Persistent inflation, concerns over interest rate hikes, and an overall sense that a recession or worse is ahead are keeping them low.
But Nvidia has a leg up on the competition as its position in gaming gives it a strong secular driver. Yes, that growth may be slowing, but NVDA stock is among the best positioned to take advantage.
Further, it looks like Nvidia shouldn’t drop much further based on its current P/E ratio, which isn’t far out of line with historic trends. At the end of the day, Nvidia will remain a great chip stock with plenty of strength moving forward.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.