With an average user age of only 31, Robinhood is a commission-free investing app popular among the millennials.
The popular broker (which is not available in Singapore) has its fair share of bad rap.
Some beginner investors are lured into Robinhood’s “gamified” features such as falling confetti, sounds accompanying each trade, and emoji-filled phone notifications.
Robinhood users are also known for chasing after speculative stocks, as seen from its 100 Most Popular Stocks list.
This list shows 100 of its most-held stocks on the Robinhood platform.
However, not all stocks on the list are speculative or highly risky.
Here are five stocks that I like, and they could be worth researching further for your own stock portfolio.
Robinhood’s 100 Most Popular Stocks
Before we explore the specific stocks, let’s look at the full list of Robinhood’s 100 Most Popular stocks (sorted according to market capitalisation):
|Alphabet Class A||GOOGL||US$1,737.43||1.16T|
|Johnson & Johnson||JNJ||US$158.45||417.14B|
|SPDR S&P 500 ETF||SPY||US$378.99||333.10B|
|Bank of America||BAC||US$33.69||294.14B|
|Vanguard Total Stock Market ETF||VTI||US$199.04||207.18B|
|Vanguard S&P 500 ETF||VOO||US$348.59||180.72B|
|Li Auto Inc||LI||US$36.46||33.75B|
|Delta Air Lines||DAL||US$40.50||25.84B|
|ARK Innovation ETF||ARKK||US$140.80||20.58B|
|Royal Caribbean Group||RCL||US$72.48||16.48B|
|Penn National Gaming||PENN||US$106.25||15.36B|
|Norwegian Cruise Line||NCLH||US$24.54||7.81B|
|Virgin Galactic Holdings||SPCE||US$26.88||6.23B|
|New Residential Investment||NRZ||US$9.50||3.98B|
|United States Oil Fund||USO||US$36.14||3.82B|
|PowerShares S&P 500 High Dividend Low Volatility ETF||SPHD||US$38.77||2.61B|
|Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares||GUSH||US$55.00||652.69M|
|Invesco Mortgage Capital||IVR||US$3.34||602.23M|
Source: Robinhood (as of 13 January 2021)
Robinhood Stock #1: Apple
Apple (NASDAQ: AAPL) is the technology giant behind many of the products we use daily, be it iPhone, Mac, or iPad. It also provides cloud and video streaming services.
Apple’s chief financial officer, Luca Maestri, mentioned the following in Apple’s fourth-quarter earnings release:
“Our outstanding September quarter performance concludes a remarkable fiscal year, where we established new all-time records for revenue, earnings per share, and free cash flow, in spite of an extremely volatile and challenging macro environment. … Our sales results and the unmatched loyalty of our customers drove our active installed base of devices to an all-time high in all of our major product categories.”
The quote nicely summarises why I like Apple as an investment.
Is Apple All That Good?
One of the major risks with Apple is to do with competition, especially from local Chinese players.
Increasing US-China rivalry might make Chinese consumers shun Apple products, and embrace locally-branded smartphones instead, hurting Apple’s business.
For context, around 15% of Apple’s 2020 sales came from Greater China, the third biggest market for Apple behind the Americas and Europe.
Robinhood Stock #2: Amazon
Amazon.com (NASDAQ: AMZN) is a leading e-commerce platform, but many may not know that it is also the world’s biggest cloud provider with its Amazon Web Services (AWS) business.
Over the past three years, Amazon’s revenue grew 27.3% annually, while its net income ballooned around 70% per year.
For its latest quarter, net profit trebled to US$6.3 billion from US$2.1 billion in the third quarter of 2019.
While it may seem that the technology company has hit a mature stage, there’s still lots of room for it to grow.
In the US, e-commerce takes up less than 20% of total retail sales.
As for the cloud space, the amount of data created in the next three years will be more than the data created over the past 30 years, according to International Data Corporation.
And all these data have to be stored somewhere, and the cloud providers, including AWS, can help to facilitate the data storage.
Is Amazon All That Good?
Amazon shares don’t come cheap.
At a share price of US$3,120.83, it has a price-to-earnings (P/E) ratio of 91x.
Its price-to-cash flow is a more palatable 29x, but there’s still plenty of optimism baked into the company. If the company fails to deliver on its growth aspects, the stock could come crashing down to earth.
Robinhood Stock #3: Facebook
Facebook Inc (NASDAQ: FB) runs the world’s largest social network, along with WhatsApp and Instagram.
Facebook possesses a business characteristic that would be the envy of many traditional companies.
It has a durable economic moat that comes in the form of “network effect”.
When a new user joins any of Facebook’s products and uses it, that product becomes slightly more valuable.
That, in turn, encourages more users to join, creating a network effect like a spider’s web. Once this network effect is created, it will be hard for users to leave the ecosystem.
Facebook generates copious amounts of cash. Facebook’s free cash flow more than doubled from US$8 billion in 2015 to US$21 billion in 2019.
Free cash flow is money that a company can use to reinvest into its own business, acquire other businesses, buy back its own shares, or pay off its borrowings.
It also has a high return on equity (ROE) of 20%. This metric shows how efficient a firm’s management is in using shareholders’ capital.
Is Facebook All That Good?
Data privacy is an important aspect for users to use such online platforms.
Whatsapp recently ruffled the feathers of its users by announcing that it’s updating its terms of service. The change will force users to share their personal data with Facebook if they want to continue using the messaging app after 8 February 2021.
This is something to take note of for Facebook investors.
Robinhood Stock #4: Disney
The Walt Disney Company‘s (NYSE: DIS) mission is to “entertain, inform and inspire people around the globe through the power of unparalleled storytelling…”.
True to its mission, it would be hard to find anyone who hasn’t been thrilled by the entertainment giant’s animation and films.
I like the optionality there is with Disney’s business. It has so many intellectual properties (IPs) that it can monetise them in various ways.
One way it is now making more money from its IPs is through its popular streaming service, Disney+.
It’s so popular that its subscriber count is already well ahead of Disney’s internal target of 60 million to 90 million subscribers by 2024. As of 2 December 2020, it already had 86.8 million Disney+ subscribers.
In Disney’s 2020 earnings release, Disney’s chief executive Bob Chapek said that its direct-to-consumer business (in which Disney+ is under) is “key to the future of our company”.
Looking at how Netflix Inc (NASDAQ: NFLX) has grown in the past, there’s plenty of growth opportunities for Disney+ as well.
Is Disney All That Good?
A major risk currently for Disney is to do with the pandemic.
Disney expects its financial results in 2021 to be still impacted by COVID-19.
It said that it doesn’t have any visibility into how long the impact will hurt its parks and experiences business. The Parks, Experiences and Products segment has been a major contributor to Disney’s revenue pre-pandemic.
Robinhood Stock #5: Airbnb
Airbnb Inc (NASDAQ: ABNB) is an American vacation rental online marketplace that connects people who want to rent out their properties or rooms with guests.
The company went public at the end of last month.
Being a marketplace, Airbnb has an asset-light business. This means the company doesn’t need to make significant investments in fixed assets and physical real estate, allowing it to be highly-cash generative.
From 2015 to 2019, even though Airbnb has been unprofitable, it managed to generate free cash flow in four of those years.
2015 2016 2017 2018 2019
919,041 1,655,576 2,561,721 3,651,985 4,805,239
Income (loss) from operations
(123,697) (132,993) (81,362) 18,744 (501,543)
Net income (loss) (US$' 000) (135,446) (147,350) (70,046) (16,860) (674,339)
Free cash flow
(123,600) 21,100 151,000 504,900 97,300
Airbnb has the potential to continue bringing in lots of cash.
Airbnb estimates that its serviceable addressable market (SAM), which is generally defined as the market opportunity that is within a firm’s existing core competencies, is US$1.5 trillion.
At 2019’s revenue of below U$5 billion, Airbnb barely scratches its market opportunity.
Is Airbnb All That Good?
Just like Disney, the immediate risk right now is to do with COVID-19.
Even though vaccination has started in many countries, it is likely to take some time before the world goes back to pre-pandemic norms and for international travel to return. An uptick in international travel is critical for Airbnb’s growth.
Government regulations not allowing short-term rentals is another risk to take note of. For instance, short-term rentals are illegal in Singapore as a minimum stay of three months is needed for private residential properties. HDB flats cannot be rented out to tourists.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer may have a vested interest in the companies mentioned.