There are many platforms today offering commission-free trades but Robinhood, founded in April 2013, emerged as a game changer. With the aim that everyone should have access to the financial markets, and not just the wealthy, Vladimir Tenev and Baiju Bhatt set out to build this platform, which has been widely accepted, primarily by the young and first-time investors.
While Robinhood does not force anyone to invest, it has received its share of criticisms too, with users making risky financial decisions. The Robinhood 100 list can provide a gauge of where the millennials are investing their money. As some investment picks are helping millennials outperform the market, it’s worth using the list to see what stocks may become future winners.
While not all stocks listed on Robinhood are fundamentally sound, there are definitely some stocks that possess both popularity and underlying strength. Alibaba Group Holding Ltd (BABA), Visa Inc. (V), Nvidia Corporation (NVDA), and Nike, Inc. (NKE) are four such Robinhood-listed stocks that should continue to soar based on their fundamental strength and a favorable industry backdrop.
Alibaba Group Holding Ltd (BABA)
As the pandemic speeds up global digitalization, the “Amazon of China,” BABA, started making a name for itself. Operating mainly in China, the leading platform for global wholesale trade operates mainly through four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others. The company is divided into three core businesses – Alibaba, Taobao, and Tmall.
For the quarter that ended June 2020, BABA’s revenue increased 34% year-over-year to $21.7 billion. The company recorded annual active consumers on the China retail marketplaces of 742 million, an increase of 16 million from the 12-month period that ended March 31, 2020. The market expects BABA’s revenue to increase 54.8% for the quarter that ended September 2020 and 25.8% next year. The company’s EPS is expected to increase 15% for the quarter, 25.6% next year, and at a rate of 18.9% per annum over the next five years.
BABA has been making headlines with its logistic arm, Cainio, partnering with Atlas Air Worldwide Holdings (AAWW), its financial affiliate Ant Group preparing to go public, and its cloud-computing arm expected to turn profitable by March 2021. BABA has an impressive earnings surprise history with the company surpassing EPS estimates in each of the trailing four quarters. The stock gained more than 45% year-to-date.
How does BABA stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #1 out of 115 stocks in the China industry.
Visa Inc. (V)
Based in San Francisco, California, V has been the center of cashless revolution and has been here for more than 55 years. Best known for the Visa credit card used by millions of people, V also offers authorization, clearing, and settlement services for financial institutions and merchants. It went public in 2008 with one of the largest IPOs in history, and now operates in more than 200 countries having revolutionized digital currency.
V reported net revenue of $4.8 billion for the quarter that ended June 30, 2020, down 17% year-over-year, driven by the declines in payments volume, cross-border volume, and processed transactions. Analysts expect V’s revenue to increase 11.4% next year. V’s EPS is expected to grow 16% next year and at a rate of 13.1% per annum over the next five years.
V has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters. The stock has gained more than 50% since hitting its low in mid-March.
V’s global partnership with PayPal Holdings, Inc. (PYPL), which it announced on September 10th, is expected to advance “digital equity,” as Covid-19 cracked the wide digital divide. In fact, V introduced new programs and resources essential to small and micro businesses (SMB) in honor of the National Small Business Week, which took place in September. Furthermore, with the opening of the cross-border travels, V’s stock is expected to surge in the coming days.
V’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Peer Grade, Buy & Hold Grade, and a “B” for Industry Rank. Among the 46 stocks in the Consumer Financial Services industry, it’s ranked #3.
Nvidia Corporation (NVDA)
Working behind the scenes, the semiconductor stock NVDA has been enjoying an excellent year. Primarily, a visual computing company, NVDA operates in two segments — GPU and Tegra processor. These digital chips drive anything from supercomputers to self-driving cars. NVDA has been generating commendable revenues from its gaming segment and data center business. For the quarter that ended July 2020, NVDA data center business recorded revenue of $1.75 billion, up 167% year-over-year. Its gaming segment revenue increased 26% year-over-year to $1.65 billion.
NVDA is rapidly expanding into the Artificial Intelligence (AI) segment, and its expected acquisition of Arm Limited from Softbank (OTCMKTS:SFTBF), which is valued at $40 billion, is further expected to help the company grow. If the acquisition goes through, it will be one of the largest semiconductor deals in history. NVDA reported total revenue of $3.87 billion for the quarter that ended July 2020, up 50% year-over-year.
Analysts expect NVDA’s revenue to increase 5.8% in the current year and 18.6% next year. The company’s EPS is expected to increase 57% in the current year, 20.8% next year, and at a rate of 20.1% per annum over the next five years.
NVDA has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters. Further strengthening its strong outlook, on October 5th, NVDA announced that it is building the UK’s supercomputer to boost COVID-19 research. The stock has gained more than 142% year-to-date.
It’s no surprise that NVDA is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Industry Rank, and a “B” for Peer Grade. In the 86-stock Semiconductor & Wireless Chip industry, it is ranked #15.
Nike, Inc. (NKE)
Associated with the iconic slogan “Just do it,” NKE is the world’s leading athletic apparel company. Founded in 1964, NKE generates revenue mainly from three financial segments: Nike Brand, Converse, and Corporate. Based in Oregon and operating worldwide, NKE is a global brand offering products in eight categories including — running, basketball, football, men’s training, women’s training, sportswear, action sports, and golf.
With the aim of accelerating NKE’s digital transformation to keep up with the changing world, it led a series of leadership changes in July as part of the Consumer Direct Acceleration (CDA). Mark Parker who had been the CEO of NKE since 2006 stepped down in October 2019, handing over the reins to the new CEO, John Donahoe.
As the situation of Covid-19 is much better in China now, NKE is in a position to gain further as “Greater-China” is one of the largest growth markets for NKE. The company’s digital sales increased 82% for the quarter that ended August 2020, with double-digit increases across North America, Greater China, and APLA. It also reported direct sales of $3.7 billion, up 12% year-over-year. The market expects NKE’s revenue to increase 12% in the current year and 11.6% next year.
NKE gained more than 105% since hitting its low of $60 in mid-March. The company’s EPS is expected to increase 73.8% in the current year, and at a rate of 16.7% per annum over the next five years. NKE’s EPS for the quarter ended August 2020 was $0.95, which surpassed the consensus estimate by 102%.
NKE’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and a “B” in Peer Grade and Industry Rank. Within the Athletics & Recreation industry, it’s ranked #1 out of 34 stocks.
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BABA shares were trading at $304.05 per share on Wednesday afternoon, down $4.73 (-1.53%). Year-to-date, BABA has gained 43.35%, versus a 10.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
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