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, Microsoft (MSFT), Walt Disney (DIS) and Nvidia (NVDA) 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, will tend to 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 Industrial Average, Nasdaq and the S&P 500 are coming under pressure after hitting all-time highs. They are either falling towards or have slipped below their 50-day moving averages.
Be very careful about making any new buys and make a defensive game plan for each stock you own.
Best Robinhood Stocks To Buy Or Watch
Now let's look at Microsoft stock, Disney stock, and Nvidia stock in more detail. An important consideration is that these stocks all boast solid relative strength. This means they are outperforming the broader S&P 500 index. They are also part of the Robinhood Top 100 Stocks, the platform's most popular stocks among traders.
Microsoft stock is just below buy zone after passing a consolidation pattern buy point of 232.96, according to MarketSmith analysis. It is looking for support at its 50-day moving average.
The relative strength line for Microsoft stock is showing signs of weakness following a spike. The RS line, the blue line in the charts below, tracks a stock's performance vs. the S&P 500. MSFT stock has gained more than 5% since the start of the year.
Microsoft is one of only four U.S.-listed stocks with trillion-dollar market caps, and is nearing $2 trillion. In this case big is beautiful as Microsoft stock has a strong, but not ideal, IBD Composite Rating of 85. The Composite Rating is designed to give an instant overview of a stock's fundamental and technical performance.
A key to Microsoft's high rating is its excellent earnings performance, which is reflected in its EPS Rating of 95. Microsoft earnings growth has accelerated for the past two quarters, reaching 34% in the most recent quarter.
Institutional investors are big backers of Microsoft stock, though its Accumulation/Distribution Rating has fallen back to C. This represents a balance of buying and selling. It boasts eight consecutive quarters of increasing fund ownership.
The software giant easily beat Wall Street's targets for its fiscal second quarter thanks to growth from its cloud computing businesses. It also guided higher on current-quarter revenue.
Analysts see further growth. Full year EPS is expected to rise by 28% in 2021, and by 9% in 2022.
Microsoft's successful pivot into cloud computing has been driving growth. It has benefited from the work-from-home and learn-at-home trends during the Covid-19 pandemic. Microsoft's cloud software and services are aiding at-home workers and students.
"What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry," CEO Satya Nadella said.
Analysts see Microsoft earnings rising by 28% in fiscal 2021 and by 9% in 2022. MSFT is on IBD's Leaderboard and Long-Term Leaders stock lists.
Disney stock is in buy range from a flat base after running past a buy point of 183.60. Shares reversed lower from a record high following strong quarterly results, however DIS stock showed some strength as it rallied back above its entry point Friday. It had been maintaining its momentum in recent sessions.
Its relative strength line has just spiked to a new high. Disney stock has an RS Rating of 77 out of a possible 99. Market performance is improving however, with Disney stock rising around 9% over the past four weeks.
Disney is a recent IBD Stock Of The Day. It was also added to Swing Trader after flashing a separate buy signal by bouncing off its 21-day exponential moving average.
Disney earnings have been badly hit by the coronavirus pandemic, with its EPS Rating slipping to very poor 12 out of 99. But this will improve as economies get back on their feet following broad lockdowns.
Wall Street is expecting full year earnings to fall 8% in 2021, before ramping up to 158% growth in 2022.
The Dow Jones giant showed it is bouncing back after crushing fiscal first-quarter estimates.
The surprise profit came as the number of streaming subscribers jumped. Disney+ subscribers climbed to 94.9 million as of Jan. 2, up 9% from 86.8 million on Dec. 2.
During the pandemic, the streaming service has been a bright spot for Disney stock, and big plans are ahead. The firm has surpassed 60 million Disney+ subscribers worldwide, and 100 million subscribers overall to its streaming offerings. Its brands include Hulu, ESPN+, and Disney+.
Disney CEO Bob Chapek said the new Star-branded streaming service will launch internationally Feb. 23. Star will be a sixth brand within Disney+ in some markets, joining the Disney, Pixar, Star Wars, Marvel and National Geographic brands. But it will feature edgier content from properties like FX and 21st Century.
At an Investor Day on Dec. 11, management said there are more than 100 titles in the works for Disney+. And Chapek said the company expects to have 230 million-260 million Disney+ subscribers by 2024. That's up from its prior estimate of 60 million-90 million for the same time frame.
Nvidia stock has reversed after breaking out of a flat base pattern. The ideal buy point was 587.76. It is now looking for support at its 50-day line. It had rose on strong earnings, but has been forced lower amid market turbulence.
The RS line for Nvidia stock had been making progress, though it is slipping slightly. It comes after a period of decline during the stock's consolidation period.
Strong fundamental and technical performance has earned Nvidia stock a Composite Rating of 91. Earnings are a key strength, which is reflected in its EPS Rating of 97.
The Stock Checkup Tool underlines its impressive recent earnings growth. Over the past three quarters, EPS has grown by an average of 81%. This is well clear of CAN SLIM requirements for 25% growth.
The recent Stock Of The Day has just posted earnings. The Santa Clara, Calif.-based company earned an adjusted $3.10 a share on sales of $5 billion in the quarter ended Jan. 31. Analysts expected Nvidia earnings of $2.81 a share on sales of $4.82 billion. On a year-over-year basis, Nvidia earnings rose 64% while sales climbed 61%.
The company also delivered upbeat guidance. For the current quarter, Nvidia expects to generate sales of $5.3 billion, vs. Wall Street's consensus estimate of $4.51 billion.
Elevated Bitcoin prices will "create a near-term demand driver that will soak up any excess supply of GPUs," Bradley Gastwirth, chief technology strategist for Wedbush Securities, said in a recent note to clients.