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, Nvidia and General Motors are standout performers. Unlike meme stocks such as GameStop and AMC Entertainment, 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, 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 stock market has been hitting a rough patch of late as inflation fears and concerns about the rise of the delta variant of the coronavirus weighing on the market.
The market is now back in an uptrend after clearing stubborn resistance. Rising energy and metals prices have been a tailwind. Higher Treasury yields have helped many financials and weighed on growth stocks, but the market has been resilient.
This Dow Jones, Nasdaq and the S&P 500 are all now well clear of the key 50-day moving average after another strong week.
Now is a good time to be buying fundamentally strong stocks breaking out of sound chart patterns. The stocks featured below are potential candidates.
Remember, things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.
Best Robinhood Stocks To Buy Or Watch
Now let's look at Microsoft stock, Nvidia stock and GM stock in more detail. An important consideration is that these stocks are solid from a fundamental perspective, while institutional ownership is also strong. They are also part of the Robinhood Top 100 Stocks, the platform's most popular stocks among traders.
Microsoft Stock
Microsoft is getting more traction above its 50-day moving average. It is currently in a buy zone after clearing a new flat buy point of 305.94. It is actionable as high as 321.24.
But keep in mind that Microsoft reports fiscal first-quarter earnings Tuesday night.
The relative strength line for Microsoft stock is near record highs. MSFT stock has gained around 39% since the start of the year, which crushes the S&P 500's gain of 21%.
Microsoft is one of a handful of U.S.-listed stocks with trillion-dollar market caps. It was the second stock to achieve the feat, after old rival Apple. Both now have valuations above $2 trillion.
Microsoft stock's strong price action has boosted its IBD Composite Rating to a near-perfect 98. The biggest key to Microsoft's high score is its excellent earnings performance, which is reflected in its EPS Rating of 94. Microsoft earnings growth has accelerated for the past four quarters. Nevertheless, price performance is also strong.
Microsoft managed to serve up a beat-and-raise report for its fiscal fourth quarter ended June 30. The firm earned $2.17 a share on sales of $46.2 billion in the June quarter. Analysts had predicted Microsoft earnings of $1.92 a share on sales of $44.2 billion. On a year-over-year basis, Microsoft earnings rose 49% while sales increased 21%.
This was the company's fourth-straight quarter of accelerating sales and earnings growth.
For the September quarter, Microsoft expects to generate sales of $43.75 billion, up 18% from the same period last year. That's based on the midpoint of its guidance. Wall Street had predicted $42.5 billion in sales for Microsoft's fiscal first quarter.
Institutional investors remain big backers of Microsoft stock overall. In total, 40% of its stock being held by funds. It boasts eight consecutive quarters of increasing fund ownership.
On Sep. 14 the company announced a $60 billion MSFT stock buyback and also raised its dividend by 11%
Microsoft has introduced Windows 11, the biggest upgrade to its PC operating system in six years. Windows 11, due for a release in time for the holiday shopping season, features a refreshed design with a new user interface and Start menu. It also provides PC performance improvements and integrates the Teams videoconferencing app. Windows 11 is the successor to Windows 10, which came out in July 2015.
Meanwhile, the firm's successful pivot into cloud computing has been driving growth. It also 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.
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Nvidia Stock
Nvidia stock briefly inched above its buy point from a new cup base, but has yet to make a decisive move. The buy point here is 230.53.
The stock is worth keeping a close eye on, as it managed to rally back strongly and retake its 50-day line. Reclaiming the 50-day line offered an early entry for NVDA stock, which is still only 5.5% above that key level.
The RS line also just hit a new high on a weekly chart.
NVDA is a member of the prestigious Leaderboard list of top growth stocks.
It has battled back well after previously flashing a round-trip sell signal after a break out from a cup with handle base failed. The graphics-chip maker was forced lower as the broader stock market retreated.
Nvidia stock has a perfect IBD Composite Rating of 99. Stock market performance is currently slightly lagging its excellent earnings, but is catching up rapidly. So far this year the stock is up more than 74% so far this year.
Nvidia beat Wall Street's targets for Q2 on strong gaming sales and solid data-center processor revenue. It posted adjusted EPS of $1.04 per share on sales of $6.51 billion. Stock rose in extended trading. Its next report is not due until
For the current quarter, Nvidia expects to generate sales of about $6.8 billion, up 44% year over year. It did not give a per-share earnings target. Wall Street had predicted Nvidia earnings of $1.05 a share on sales of $6.57 billion in the fiscal third quarter.
Earnings is a key strength, with its EPS Rating coming in at 96. The Stock Checkup Tool underlines its impressive recent earnings growth.
Over the past three quarters, EPS has grown by an average of 85%. This is well clear of CAN SLIM requirements for 25% growth.
Such performance has won it admirers on Wall Street. This is reflected in its Accumulation/Distribution Rating of B-, which represents moderate-to-heavy buying over the past 13 weeks. Noted holders include the like of the MFS Growth A Fund (MFEGX)
In mid-April, Nvidia unveiled its first central processing unit, or CPU, called Grace. Nvidia currently sells graphics processing units, or GPUs, which act as accelerators for CPUs made by other companies. With its own CPU, Nvidia will offer a more complete system for data centers, in a move that is seen as a direct challenge to Intel and Advanced Micro Devices.
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GM Stock
GM stock is just below a 59.44 handle buy point from a double-bottom base. General Motors stock is also on the verge of retaking the key 50-day moving average.
A key point to bear in mind is earnings are due Wednesday.
An approach highlighted by Investor's Business Daily is to use options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
The RS line is trying to recover make progress again after recent dip. The decline interrupted a strong uptrend.
Stock market performance has been outstripping earnings, but both are improving. The stock has risen around 39% since the start of 2021.
General Motors has been seeing its profit levels ramp up over the past three quarters. A clear indication its improving fortunes is the fact its Composite Rating has risen to 81-out-of-99.
GM is a cyclical play, but this is no ordinary cycle. Economic growth is exploding, while GM and other automakers face easy comparisons to 2020, when auto plants were shut for months due to Covid-19 restrictions.
Big money has been buying up the stock of late, which is reflected in its Accumulation/Distribution Rating of B-. In total, 46% of its stock is held by funds.
On May 27, General Motors announced it would reopen four North American plants as its chip shortages ease. Shares also leapt June 3 after the firm said it will increased production of both large and midsize pickup trucks in North America due to increasing demand. The Detroit firm also raised guidance for financial results for the first half of 2021.
One key part of the CAN SLIM formula that GM is pursuing is the N, which stands for New Products. GM has also said it hopes to phase out the sale of ICE light vehicles by 2035.
At its investor's day GM announced it will offer Ultra Cruise, a high-end version of its Super Cruise driver assistance system, starting in 2023. Super Cruise now provides hands-free driving on 200,000 miles of highway. Ultra Cruise will launch with coverage of 2 million miles of road.
GM also revealed plans for a Chevrolet Equinox crossover priced around $30,000.
GM's plan to more than double its recent average of $140 billion in annual revenue by 2030 includes adding $50 billion from its Cruise autonomous division. Software and services could add another $25 billion, including as much as $6 billion from the recently launched OnStar Insurance. The BrightDrop commercial delivery van and logistics business could add $10 billion a year.
EV revenue should grow from $10 billion in 2023 to $90 billion by 2030, GM says.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
