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, Alphabet (GOOGL), Advanced Micro Devices (AMD) and Microsoft (MSFT) are standout performers. Unlike meme stocks such as GameStop (GME) and AMC Entertainment (AMC), 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.
New Covid worries have taken a toll on the market, but a rebound following the latest Fed meeting saw the IBD market outlook switch to a confirmed uptrend. While it came under pressure for a spell, an early start to the Santa Claus rally helped the stock go back into a full uptrend on Christmas Eve. The Nasdaq, S&P 500 and the Dow Jones Industrial Average are all back above the key 50-day moving average. They are also trading around record highs.
With the market uptrend back in force, this is the best time to buy fundamentally strong stocks that are breaking out of proper base patterns. The stocks below are ideal candidates. Nevertheless, it remains crucial that investors stay disciplined and stick to sound buy and sell rules.
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 Google stock, AMD stock and Pfizer 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.
Google parent Alphabet has formed a new flat base with a 3,019.43 official buy point. It is also back above its old ideal buy point of 2,925.18, according to MarketSmith analysis.
Google stock has also retaken its 50-day moving average and its 10-week line. These are encouraging signs.
The relative strength line has been moving sideways for the past few months after a strong advance. The RS line gauges a stock’s performance compared to the S&P 500.
GOOGL stock has a near-perfect IBD Composite Rating of 96. That puts it in the top 4% of stocks tracked overall. Earnings outshine stock market performance, with its EPS Rating a very strong 98 out of 99.
Earnings have grown by an average of 123% over the past three quarters. This is almost five times the 25% growth sought by CAN SLIM investors.
Analysts see strong growth ahead, with Google earnings per share expected to explode 105% in 2021, and then growing by a further 5% in 2022.
The tech giant has a Relative Strength Rating of 92. That means it has outperformed 92% of stocks tracked over the past 12 months in terms of price performance.
Recent performance is strong, with Google stock rising almost 68% so far in 2021. This far outstrips the S&P 500’s gain of under 27%
Big money has unloading Alphabet stock of late, though this comes amidst a broad sell-off. This is reflected in its Accumulation/Distribution Rating of D- which reflects slightly more selling than buying over the past 13 weeks.
Alphabet in April announced a new $50 billion GOOGL stock buyback. On its June quarter earnings call, Google announced a modification of the share repurchase agreement allowing the company to repurchase either class A or class C shares.
Late on Oct. 26, Alphabet posted Q3 earnings. EPS jumped 71% to $27.99, including gains on equity investments. Gross revenue rose 41% to $65.12 billion in the quarter ended Sept. 30.
Analysts had estimated Google earnings of $23.73 per share on gross revenue of $63.5 billion.
Internet search and other revenue rose 44% to $37.93 billion vs. estimates of $36.41 billion. Google said cloud-computing revenue rose 45% to $4.99 billion vs. estimates of $5.17 billion. Despite the revenue miss, Google cloud cut its operating loss almost in half to $644 million.
YouTube advertising revenue rose 43% to $7.2 billion. Analysts had estimated YouTube ad revenue of $7.42 billion.
While Google has expanded into cloud computing and consumer hardware, digital advertising still makes up the lion’s share of revenue. Google announced in early March that it will stop employing web browser-tracking technology for the purpose of selling advertising. Earlier, Google said it would phase out third-party cookies.
Google plans to utilize “contextual” technology that enables advertisers to target aggregated groups of consumers with similar interests, such as travel, sports or fashion.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Microsoft is eying a new flat base entry of 349.77. It remains extended past an old flat buy point of 305.94. Last week it made a show of strength by regaining its 50-day line.
The relative strength line for Microsoft stock is near record highs. MSFT stock has gained nearly 51% since the start of the year.
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 (AAPL). 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 92.
Microsoft managed to top analyst estimates for its fiscal first quarter. It also guided higher for the holiday quarter.
The firm earned $2.27 a share on sales of $45.3 billion in the quarter ended Sept. 30. Analysts had predicted Microsoft earnings of $2.08 a share on sales of $44 billion. On a year-over-year basis, Microsoft earnings rose 25% while sales increased 22%.
“We delivered a strong start to the fiscal year with our Microsoft Cloud generating $20.7 billion in revenue for the quarter, up 36% year over year,” Chief Financial Officer Amy Hood said.
For the December quarter, Microsoft expects to generate sales of $50.6 billion, up 17% from the same period last year. That’s based on the midpoint of its guidance. Wall Street had predicted $49 billion in sales for Microsoft‘s fiscal second 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.
Santa Claus Rally Comes Early As These Stocks Flash Buy Signals
AMD found support at its 10-week moving average for the first time after a breakout from a base in October. It is in the buy zone from a rebound entry. Its buy point here is 140.00 and it is actionable as high as 154.00.
The stock managed to break a trend line as it turned in a strong weekly gain heading into Christmas. Its Dec. 16 high of 147.93 will be another key hurdle going forward.
The chip leader triggered the eight-week hold rule after a quick 20% gain its most recent base buy point; but this period is now over.
The relative strength line has been trying to regain lost ground following a recent dip. Overall though it has handily outperformed on this score in 2021.
In fact, AMD stock has spanked the broader market so far this year, gaining over 59%.
Earnings are another cornerstone of the chip giant’s success. It boasts a perfect EPS Rating, and earnings have risen by an average of 172% over the past three quarters.
Wall Street has boosted its earnings forecasts. On consensus, analysts see profit up 105% this year to $2.64 a share and rising another 27% in 2022.
Indeed, a number of heavyweight funds are holder of AMD stock. This includes the highly-rated Fidelity Contrafund (FCNTX).
AMD continues to grab market share in the datacenter market as the firm forges ahead with its efforts to innovate its chip designs
The firm announced Nov. 8 it has won Meta Platforms, formerly known as Facebook, as a data center chip customer.
It also revealed the MI200 accelerator chip, which aims to speed up tasks such as machine learning and artificial intelligence.
The completion of its proposed buy of Xilinx would broaden its product offerings in system-on-a-chip circuits.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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