To be 100% sure, there is nothing good about this novel coronavirus pandemic. We’ve lost far too many people in the U.S. and throughout the world. Worse yet, health experts forecast that more innocent lives will be taken. Nevertheless, the shifting of our priorities and perspectives have enabled positive change. One of those is how we view personal investing. And this is perhaps no better exemplified than through so-called Robinhood stocks.
As I’m sure you’ve heard, Robinhood is an absolute phenomenon, a trading app that finally taught millennials and younger people the importance of putting money to work for you for the long haul. Before the pandemic upended everything, financial analysts had trouble convincing the young to invest and invest early.
Now, some of that can’t be put squarely on the shoulders of millennials. After all, this demographic is burdened with student loan debt. As well, many in this age bracket have grown up watching their parents and relatives suffer tremendously through multiple crises and recessions. According to the Washington Post, a severe economic downturn in one’s teenage years can permanently alter behavior.
But in this case, the pandemic may have ended up fighting fire with fire. One of the most talked about of talking points was the dramatic rise of Robinhood stocks. Suddenly, the demo that eschewed investing for enjoying experiences today have become rabid consumers of publicly traded securities.
Of course, this dynamic isn’t without its criticisms. As many experts have pointed out, the trading app utilizes a “gamified” interface. With playful graphics and sounds accompanying each conducted trade, many fear that the platform is creating addictions rather than a true appreciation of money management. Still, the magnitude of popularity for these Robinhood stocks to buy seem to refute that claim.
- Coca-Cola (NYSE:KO)
- Microsoft (NASDAQ:MSFT)
- Facebook (NASDAQ:FB)
- Amazon (NASDAQ:AMZN)
- Alibaba (NYSE:BABA)
- Sony (NYSE:SNE)
- PayPal (NASDAQ:PYPL)
- Peloton (NASDAQ:PTON)
- Plug Power (NASDAQ:PLUG)
- Moderna (NASDAQ:MRNA)
Frankly, when you look at the above list, it’s alarming how normal it looks. No, I’m not talking about new normal normal, but how we used that term before this crisis. Honestly, many of these Robinhood stocks would belong on most investors’ portfolios, irrespective of their risk profile.
If you can say one thing, money talks and millennials are putting their green on reasonable, high-probability investments. Therefore, you can take lessons from this crowd and consider these Robinhood stocks for your own long-term strategy.
So that you can follow my logic, I’ll be breaking down the following Robinhood stocks to buy into three segments: safe/boring, technology/innovation, and speculative. Of course, you will see much overlap in these companies. However, there’s no such bleed through with Coca-Cola. More than likely, you’re not going to find anyone that would suggest KO stock is an exciting name.
Apparently, though, millennials will disagree. Coca-Cola is one of the most popular Robinhood stocks, featuring an “81% buy” rating on the trading app’s Top 100 list. Frankly, the inclusion of KO stock on this revered – I guess you can call it that now, right? – list contradicts the many arguments that young Americans are whimsical space cadets.
Obviously, I can’t know for sure what most millennial traders are thinking here. Nevertheless, I can say that Coca-Cola is a smart idea, especially if we’re heading into a prolonged recession. Mainly, this is because the new normal disincentivizes high-contact beverage retailers while incentivizing standard grocery fare, which suits the soft drink icon perfectly.
Ordinarily, Microsoft belongs with the crowd of technology-based companies. But in the specific context of Robinhood stocks, the fact that MSFT stock ranks so highly (a 90% buy at time of writing) confirms that young investors aren’t always about chasing the flashy flavor of the week. Instead, with MSFT being so popular, it’s evidence that millennials care about their financial future.
One of the biggest reasons why non-Robinhood traders love MSFT stock is that it’s levered to everything. From software applications to cloud computing to video games, if it’s digital, it’s likely that Microsoft has a solution. And if it doesn’t, it may be cooking something up.
But with the new normal, Microsoft is taking on more importance. Thanks to its proprietary business communication platform Microsoft Teams, the company was fortuitously prepared for the pandemic. As well, it’s possible that over time, the tech firm can steal some market share from obvious plays on Covid-19.
One of the surprising listings among the most popular Robinhood stocks was Facebook. No, I wasn’t surprised that younger people bought up its shares. Rather, it’s that FB stock is so darn trendy. At time of writing, Facebook enjoys an 84% buy rating, which is right up there with some compelling companies.
Not only that, FB stock ranks highest among the big three in social media. Snap (NYSE:SNAP) is considerably lower at 64%, even though its platform resonates deeply with young adults. And then you have Twitter (NYSE:TWTR), President Trump’s favorite social media outlet. I don’t think there’s any relation, but TWTR has a comparatively subterranean buy ranking at 22%.
In my opinion, the takeaway here is that Facebook has long-term relevance. Sure, you can spout off with or against celebrities on Twitter. You can goof around and have fun on Snapchat. But only through Facebook can you do all these things while simultaneously using its network for productive or professional endeavors. You see, millennials are much more forward-thinking than critics give them credit.
For these next four popular Robinhood stocks to buy, I’m going to focus on the broader technology space. While you can fit so many names here, the trading app’s users have spoken: Amazon is not only one of the most popular tech-related tickers on Robinhood, but it currently ranks inside the top five with a sky-high 94% buy.
Again, this is an opportunity where we might need to rethink our assumptions about millennial investing behaviors. Though there’s no denying that we saw some crazy trades this year – Hertz Global (NYSE:HTZ) anyone? – time and again, young adults are choosing publicly traded companies with solid fundamentals and credible pathways to growth. Honestly, you can’t argue against AMZN stock for almost any investment strategy.
Further, the popularity of Amazon may point to millennials really absorbing current events and applying them to their portfolio. For instance, e-commerce sales as a percentage of total retail revenues jumped to 16.1% in the second quarter of 2020 from 4.42% in Q1. That’s a whopping 36.44% increase and a sequential quarter-to-quarter record since data was kept.
Since the new normal may be an extended reality, AMZN stock is easily a long-term buy.
Unless you’re President Trump, China isn’t the most popular subject right now in the U.S. However, for the Trump administration, going after the Chinese – while apparently profiting from them, if a damning New York Times article regarding a secret bank account is to be believed – is part of the master plan.
But to millions of voters, this may appear like the arsonist is also the fire chief. If so, we could see Joe Biden take the White House. Theoretically, this should be the best outcome for Alibaba.
That said, even if lightning strikes twice for Trump, you shouldn’t ignore the draw of BABA stock. Currently, the Chinese e-commerce giant has a 96% buy rating. Only Virgin Galactic (NYSE:SPCE) and Catalyst Pharmaceuticals (NASDAQ:CPRX) are more popular, both tied at 100% buy.
Perhaps one of the strongest reasons to consider BABA stock – and other Asia-related investments – is higher social trust in the region. According to the Chinese Journal of Sociology, long-term urban residents in China tend to be more trusting than their rural counterparts, which may have played a role in their containing of the novel coronavirus.
Interestingly, social trust increased in South Korea regarding society and government agencies. I suspect a similar dynamic in other Asian countries, which makes BABA a clever contrarian buy among Robinhood stocks.
Many years ago, video games were considered child’s play. Not anymore. Now, the sector has become a multi-billion-dollar industry, attracting players of all backgrounds. Therefore, I wasn’t too terribly surprised when a survey by the Entertainment Software Association revealed that 38% of players were aged 18 to 34 years, while 26% fell under the ages 34 to 54 years bracket.
The under 18 years crowd? They only represent 21% of gamers! Logically, then, we also shouldn’t be taken aback when one of the most popular Robinhood stocks to buy has been Sony. At time of writing, SNE stock has a 92% buy rating, rounding out the top five.
True, Japanese firms for years have suffered from severe bouts of irrelevance. Admittedly, Sony has not always provided much confidence to stakeholders. Nevertheless, what has always kept the lights on at the consumer technology firm and then some is its PlayStation video game console.
With the latest PS5 scheduled for release this holiday season, interest has intensified for SNE stock. In addition, Sony has been a leading manufacturer of smartphone optics technology, making it a much more compelling opportunity than before.
Another highly regarded play among tech-related Robinhood stocks is PayPal. A spinoff of online marketplace eBay (NASDAQ:EBAY), PYPL stock has enjoyed some significant rallies since its introduction as a separate tradable entity. Currently, shares have an 84% buy rating on the trading platform and outside fundamentals suggest PayPal could get even more popular.
Primarily, the company has substantial exposure to addressing the unbanked and underbanked. According to the Federal Deposit Insurance Corporation, a 2019 survey revealed that 5.4% of U.S. households (roughly 7.1 million households) were unbanked. With the economic calamity associated with the coronavirus pandemic, along with the number of the underbanked, that leaves a huge gulf of Americans without adequate access to the financial system.
Addressing this crisis within a crisis is pivotal to bringing some measure of social equity in this country. Fortunately, PayPal can play an important role here, giving PYPL stock some credibility as an environmental, social and governance (ESG) play.
Moreover, people and businesses are going cashless due to the global health emergency. That only makes PYPL more compelling, which explains its popularity among Robinhood traders.
For my final three ideas for Robinhood stocks to buy, I’m going to address the more speculative choices that have attracted millennials. First up is Peloton, the manufacturer of the exercise bike that drew much scorn before the Covid-19 pandemic upturned our world.
If you’ll recall, there was much buzz about Peloton’s commercial, which featured a man gifting his fit, attractive wife the underlying exercise bike. In my opinion, I thought it was ridiculous in a goofy sort of way. However, many folks weren’t having it, leading to some interesting back-and-forth on social media.
Well, those were simpler times, to say the least. During the crisis, PTON stock has absolutely dominated the markets, gaining over 330% year-to-date. Unfortunately, Peloton suffered a PR bruising when it had to recall thousands of bikes due to injury reports.
Obviously, this isn’t a great look for PTON stock, so it’s no shocker that shares have been volatile since the disclosure. Still, it appears Robinhood traders don’t care because PTON still has an 88% buy rating. With Covid-19 cases rising sharply since early September, this might be a speculative bet worth considering.
Plug Power (PLUG)
Over the last several days, fuel-cell specialist Plug Power has printed red ink, worrying many investors that they’re at risk of holding the bag. Despite this concern, PLUG remains one a favorite among Robinhood stocks, featuring an 89% buy rating. Coincidentally, it ranks just above Peloton.
Based on what we’re seeing in this election cycle, speculators have good reason to be bullish on PLUG stock. According to JoeBiden.com, if the former Vice President wins, his environmental plan “will set a target of reducing the carbon footprint of the U.S. building stock 50% by 2035.”
Better yet for PLUG stock, Biden doesn’t necessarily need to keep that promise right away. Just by winning the election, Plug Power could soar to the moon on anticipation of a greener future for the company and the environment. Assuming that the polls aren’t fake, the former VP does have a great shot of bringing it home.
Probably the riskiest among the well-known Robinhood stocks right now is Moderna. As you know, the company has been hard at work developing a vaccine for the coronavirus. Therefore, the company clearly has the support of the White House along with a hurting public that is desperate for a long-term solution. Regrettably, nothing is ever so simple with vaccines.
Over the last several weeks, I’ve written extensively about the major vaccine contenders, including Moderna. Although MRNA stock is an intriguing play thanks to the underlying messenger RNA platform, nucleic-acid vaccines have never been approved by the Food and Drug Administration. Thus, if Moderna’s candidate meets clinical muster, it would be a first.
However, multiple vaccine candidates have encountered setbacks. As well, an antibody drug developed by Eli Lilly (NYSE:LLY) also suffered hiccups, resulting in a temporary pausing of its late-stage clinical trial. As far as I’m aware, Moderna’s vaccine hasn’t generated safety issues. Still, if a problem pops up, that could spell trouble for MRNA stock.
From this vantage point, Moderna could fly higher because of extraordinary demand. However, you should also be aware of the severe downside risk.
On the date of publication, Josh Enomoto held a long position in SNE.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.