Best Stocks To Invest In On Robinhood

Best Stocks To Invest In On Robinhood: The app-based Robinhood brokerage service has positioned itself as the future of investing. It says it is “on a mission to democratize finance for all”, which is demonstrated by its focus on simplifying the process of stock trading.

Beginners like Robinhood for its user-friendly interface, as well as the tools and educational resources available to users. Trades are commission-free, and investors can work with options, cryptocurrency, and other relatively sophisticated assets. 

Robinhood has taken off among college students, many of whom are investing in the stock market for the first time. The fact that there is no minimum balance requirement means trading is available to anyone, regardless of socio-economic status. 

So it’s easy to trade on the mobile-focused platform, but what are the top stocks to trade on Robinhood?

Robinhood Is Growing Fast But…

Though financial services professionals were once certain that the platform’s popularity would not spread beyond its initial core demographic, Robinhood membership is growing at an extraordinary rate.

In 2017, Robinhood had just 2 million accounts. By the end of 2019, that figure was up to 10 million. In the first quarter of 2020 alone, Robinhood reported the addition of 3 million new users.

More importantly, Robinhood is making money. For the second quarter of 2020, Robinhood reported $180 million in trading revenue. That’s almost twice its first quarter revenue of $91 million.

Robinhood’s fundamental mission of reaching new investors has a downside. Lack of experience and a do-it-yourself platform can lead to poor decisions.

One common issue is the tendency for Robinhood users to buy the stocks that are trending, rather than those likely to deliver true value, both short-term and long-term. 

A better strategy for new investors is to choose stocks that will perform over time instead of those that are temporarily trending. These are five examples of high-quality companies that qualify as the best stocks to invest in on Robinhood 

Microsoft Cloud Revenue Growing Massively

When it comes to technology, Microsoft has long been a market leader. This is due, in part, to the company’s ability to shift and adjust its strategy to meet changing consumer needs.

Microsoft currently operates three distinct divisions – its Productivity and Business Processes branch that produces software like Office, it’s Intelligent Cloud branch that manages the popular cloud platform Azure, and its More Personal Computer branch, which is in change of licensing Windows, developing and producing Xbox hardware and games, and so on. 

Even under the unprecedented conditions that were present in early 2020, Microsoft has been able to thrive. When business closures reduced demand for Productivity and Business Processes, the company focused on its work-from-home must-haves – Intelligent Cloud products and services – as well as gaming-related products.

Right now, Microsoft Azure is the second largest cloud infrastructure platform in the world, and market share is growing. For fiscal 2020, commercial cloud revenue increased 36 percent year-over-year to a total of $50 billion, and that figure continues to go up. 

In short, Microsoft proves again and again that it’s a smart choice for investors, whether they are working towards short-term or long-term financial goals. 

Costco Is Virtually Recession-Proof

Costco might, on the surface, seem to be an unexpected choice when it comes to a list of the best stocks to invest in on Robinhood. However, when you dig a little deeper the logic is indisputable.

In a nutshell, Costco is essentially recession-proof, which is a major advantage when the market is volatile. No matter how tight budgets get, people still spend on food. Companies that offer lower prices on such necessities tend to stay strong regardless of economic ups and downs. 

Costco, in particular, has an edge that some of the other companies in this space can’t match. Generally speaking, the company’s revenues increase consistently year-over-year.

According to the most recent earnings report, Costco saw annual sales go up 9 percent for fiscal year 2020 for a total of $163 billion.

Earnings came in at $3.7 billion, which nearly matches the $3.4 billion in membership fees paid by its 54 million subscribers.

In other words, Costco doesn’t need to make its money from product sales – it can turn a profit based on its business model alone. That makes Costco stock a smart buy for Robinhood investors. 

Home Depot Has A Massive, Growing Empire

Construction and home improvement require lots of materials, and Home Depot is well-positioned to capitalize on that demand. When the company launched, the concept of a hardware superstore was fairly novel, but Home Depot has since grown into a massive empire boasting 2,200 stores across North America.

Despite competition from rivals like Lowe’s and Tractor supply, Home Depot is far and away the leader in the home improvement space. 

The COVID-19 pandemic was a windfall for Home Depot, as many under stay-at-home orders took the opportunity to catch up on household projects. The company is expected to grow earnings by 10.5 percent this year, though that is likely to drop into single digits next year. 

From the perspective of investors, Home Depot’s dividend is an important incentive to buy and hold shares. In the past year, it has paid out $6 per share, which translates to a yield of 2.2 percent. That’s 0.4 percent higher than the S&P 500 average of 1.8 percent. 

The Google Juggernaut Keeps On Chugging

Google is now owned by the Alphabet Company, but shares still trade under the same GOOG symbol. That’s comforting for superstitious investors who don’t want anything to interfere with the stock’s meteoric rise.

Since its IPO in 2004, shares have gained roughly 24.8 percent per year, and there is no sign of a slowdown. In terms of market share, Google holds roughly 92 percent of all search engine traffic, which means it leads the industry in advertising revenue.

Alphabet is always focused on innovation, and it owns a number of businesses besides Google that are working on cutting edge projects.

The R&D unit known as “X” is highly secretive, but the company has tantalized the public with hints that its goal is a “moonshot”.

Other subsidiaries include Verily, a healthcare and disease prevention research company and Sidewalk Labs – an effort to bring technological innovation to urban areas.

In short, Alphabet is heavily involved in the future of technology, which gives investors every reason to believe in its long-term success. 

Will Apple Be A $3 Trillion Company?

Apple has been successful beyond its founders’ wildest dreams, hitting a market cap of $2 trillion in August 2020.

It was the first US company to reach this milestone, thanks to exponential growth over the past two years. In 2019, share prices increased by 86 percent, and as of mid-August, they were up 59 percent year-to-date for 2020.

In fact, share prices were so high that business leaders decided to move forward with a four-for-one stock split in early September 2020. 

Apple is still making money on its line of iPhones, and revenues are expected to increase sharply in the coming year. Most industry experts project big gains for the company as consumers switch over to 5G technology.

Aside from that, Apple has a number of other lucrative divisions, including Apple Pay, Apple Music, Apple TV+, and the App Store. Further, it is making waves in wearables with the well-received Apple watch – and there are more products to come. 

All in all, when it comes to a reliable choice for continuous growth, Apple is number one on many investors’ lists. 

The Best Stocks to Invest in on Robinhood

When you are new to trading, it can be difficult to know which stocks are right for your portfolio.

The goal is to find a diverse mix of complementary investments that will grow in value over time. Instead of choosing your trades based on trends, which are often fickle, buy into strong, proven companies with a history of success and a promising future. Microsoft, Costco, Home Depot, Google, and Apple are smart choices.

Better still, since Robinhood permits the purchase of fractional shares, you can add these companies to your portfolio regardless of per-share price.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.