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), Apple (AAPL) and DraftKings (DKNG) 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 all near all-time highs. However, they have been falling toward their 50-day moving averages lately, with the Dow slipping below this key benchmark. This is a bearish indicator. In addition, the current market uptrend is under pressure. This is a time to exercise caution when buying stocks. If you do decide to make a purchase, focus only on stocks showing exceptional fundamental and technical strength.
Best Robinhood Stocks To Buy Or Watch
Now let’s look at Microsoft stock, Apple stock, and DraftKings 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.
The software giant rose last week, defying the sell-off, and on Monday climbed back above a 232.96 buy point, according to MarketSmith analysis. However, investors also could view 228.22 as the ideal buy point for MSFT stock.
The relative strength line for Microsoft stock is starting to swing higher. The RS line, the blue line in the charts below, tracks a stock’s performance vs. the S&P 500.
Microsoft is one of only four U.S.-listed stocks with a trillion-dollar market capitalization. In fact, it is now worth almost $2 trillion. In this case big is beautiful as Microsoft stock has an almost-perfect IBD Composite Rating of 97. The Composite Rating is designed to give an instant overview of a stock’s fundamental and technical performance. It ranges from 1 to 99, with those 90 and higher being the best to consider.
A key to Microsoft’s high rating is its excellent earnings performance, which is reflected in its EPS Rating of 96. Earnings have accelerated for the past two quarters, reaching 34% growth in the most recent quarter.
The software giant easily beat Wall Street’s targets for its fiscal second quarter thanks to growth from its cloud-computing businesses.
Microsoft’s successful pivot into cloud computing has been driving growth. The company 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 27% in fiscal 2021 and by 9% in fiscal 2022. MSFT is on IBD’s Leaderboard and Long-Term Leaders stock lists.
Apple stock is back below a 138.89 buy point from a cup-with-handle buy point. If it can rebound from its 10-week moving average, this will also offer an entry point.
Apple stock fell 5.1% last week, and 9% from Jan. 25’s all-time high. Shares fell below their buy point on Thursday and through the 21-day line on Friday.
Apple is another of the select band of firms worth more than a trillion dollars in the U.S. stock market. It is worth even more than Microsoft, with a market cap of $2.2 trillion. Apple stock has a very good Composite Rating of 94 out of a best-possible 99.
The IBD Stock Checkup tool shows earnings growth was hit amid the pandemic in recent quarters. Apple has averaged 16% growth over the past three quarters, which is shy of the 25% earnings growth sought by CAN SLIM investors. However EPS grew by a strong 34% in the most recent quarter.
One reason to be bullish on Apple is it continues to produce new products, which is a major success factor in the CAN SLIM system. The firm recently introduced its first Mac computers with processors the company designed itself rather than those supplied by longtime partner Intel (INTC).
Apple executives showed off a lineup of Mac computers running the company’s new M1 processor. The M1 chip delivers up to 3.5-times-faster central processing unit performance than Intel-based Macs. Chip foundry Taiwan Semiconductor Manufacturing (TSM) will make the chips for Apple, using its 5-nanometer process technology.
The M1 news comes after the firm revealed its iPhone 12 lineup of 5G-enabled smartphones as well as the HomePod Mini smart speaker. Apple has also introduced its sixth-generation Apple Watch smartwatches, new iPad tablets, Apple Fitness+ service and Apple One subscription service bundles.
DraftKings stock is near a buy zone after trying to break out of a cup-with-handle base. The ideal buy point is 56.08. DKNG stock just cleared that entry on Thursday, but reversed lower on Friday.
The relative strength line has been making progress since late December, though it is off 12-month highs.
DKNG stock has a decent Composite Rating of 82. The IPO stock’s market performance is its strong suit, which is reflected in its RS Rating of 94. This means it is in the top 6% of stocks in terms of market performance over the past 12 months.
DraftKings is an online sports platform that allows users to play daily fantasy games and win cash prizes.
The November election results saw voters in several states approve ballot measures legalizing sports betting. DraftKings is primed to take advantage of this burgeoning shift in attitudes.
While DraftKings has yet to turn a profit, it is on the road to making money. After losing $3.26 a share in 2019, analysts expect the company to lose $1.92 in 2020 and $1.12 per share in 2021. The reason for optimism is its burgeoning revenue.
In the most recent quarter, revenue surged 98% year-over-year surge to $132.8 million. DraftKings raised its full-year 2020 revenue range to $540 million-$560 million, which equates to 25%-30% annual revenue growth. It sees 2021 revenue rising 45% to $750 million to $850 million.
DraftKings last year announced that NBA legend Michael Jordan was joining the company’s board of directors as a special advisor. The company also entered into a multiyear agreement with Disney‘s (DIS) ESPN to become a co-exclusive sportsbook link-out provider and exclusive daily fantasy sports provider of the media giant.