Robinhood Markets Inc. (ticker: HOOD) is a popular stock and Exchange-Traded Fund (ETF) trading application that has become more popular among young traders because it allows them to make commission-free trades. The company went public on July 19, 2021, and its stock has had ups and downs in the almost two months it has been listed, so much so that there have been questions asked whether the company became a meme stock. Robinhood stock is currently trading at $44.91 a share.
Although the company’s stock has not been that stable, its trading platform has been stable since it went public, and there are top-performing stocks you could buy or watch on the platform and include them on your portfolio. The star performers include tech giant Microsoft Corporation (ticker: MSFT), graphics chip maker and designer Nvidia Corporation (ticker: NVDA), and camera and social media company Snap Inc. (ticker: SNAP).
The crucial ingredients
Thousands of companies have their shares listed on stock exchanges like the New York Stock Exchange (NYSE) and the tech-heavy Nasdaq, and picking out a few to have in your portfolio is easy. What is not easy, though, is picking out those great stocks that promise a good return on your investment, and this is where you need to look at a few indicators to help you make a better decision.
Some of these are earnings, stock market performance, and sector. Consensus analysts suggest that a good method to follow is to pick out a stock that has reported a growth of at least 25% in the recent earnings reports. Also, look at how the stock has been performing on the stock market. For this, you can look at the year to date performance, and if you are not yet satisfied with that, you can stretch it to year over year. Another thing to look at is the sector of the stock you are trying to pick out. Companies with new game-changing products and services and those that have recently gone public can be good additions.
Microsoft is no stranger to these kinds of lists. The company’s performance over the years, and more recently since the onset of the pandemic around March 2020, has painted a big smile onto investors’ faces. The company’s stock has grown exponentially as the company has released better than expected earnings reports in the previous five consecutive quarters.
The same has also happened to its profits. Microsoft has been so profitable over the past two years that it even decided to increase its dividends by 11% effective this quarter. Apart from rewarding its shareholders handsomely, Microsoft will also use the accumulated cash to buy back some of its shares in a program budgeted to cost over $60 billion.
Only the second trillion-dollar company after another tech titan, Apple Inc. (ticker: AAPL), Microsoft has a market capitalisation of $2.25 trillion. Its stock is currently trading at $299.35 a share. Microsoft has seen its shares soar 37.51% year to date and 42.93% year over year. The company has outperformed the S&P 500 Index by far this year.
Microsoft has an Investment Business Daily (IBD) Composite Rating of 99, a perfect “Buy” rating. Apart from outstanding performance and fantastic earnings reports, Microsoft also has strong guidance for the quarter ending September, which serves as the company’s first quarter of the 2022 fiscal year (Q1 FY2022). The company expects to post sales of $43.75 billion, which beats Wall Street expectation of $42.5 billion. Microsoft’s stock is neither overbought nor oversold. It is balanced on both ends of the trade, and its institutional investment is one of the strongest in the market, with 40% of its stock being held by funds.
Headquartered in Santa Clara, California, Nvidia Corporation (ticker: NVDA) has had such a brilliant year. This American multinational technology company that designs graphics processing units for the gaming and professional markets and computer chips used in smartphones and cars is a top growth company. It has seen its stock soar as high as 68.38% year to date 69.40% in the previous 12 months.
Investors have their eyes glued to this stock to see how far it can go, and just like Microsoft, this chip-maker also has a perfect 99 IBD Composite Rating. The company has also far outperformed the benchmark S&P 500, which has grown a decent 19% year to date.
Nvidia’s Q2 FY2021 earnings report beat Wall Street expectations thanks to solid gaming sales and strong data-centre processor revenue, posting revenue of $6.51 billion. The company’s Earnings Per Share (EPS) in that quarter was $1.04, and this news sent the stock even higher in extended trading hours that day. Currently, Nvidia market capitalisation is more than half a trillion dollars, standing at $552, and its shares are trading at $220.81 each.
Nvidia also issued strong guidance for its third quarter of the 2021 fiscal year (Q3 FY2021), where it expects to end it with revenue of $6.8 billion, up 44% year over year. This is higher than Wall Street expects the company to generate in Q3, which is $6.57 billion and an EPS of $1.05. Speaking of EPS, Nvidia’s EPS has grown by an average of 87% over the past three quarters, according to market data by FactSet.
Snap Inc. (ticker: SNAP), the developer of the popular instant messaging app Snapchat is in a “Buy” zone. The company’s stock is trading at $83.11, but it has registered tremendous growth this year. With a year to date growth of 67.59% and a staggering 222.88% year over year, Snap has far outperformed the S&P 500 and other big social networks like Facebook Inc. (ticker: FB) and Twitter Inc. (ticker: TWTR). The company has a market capitalisation of $131.41 billion.
Snap has an IBD Composite Rating of 96, and numerous institutional investors are pleased with its performance, judging by how many have included it in their portfolio. To put this in context, 50% of Snap stock is held by funds, signalling a solid backing.
On July 23, 2021, Snap released its earnings report for its second quarter of the 2021 fiscal year (Q2 FY2021), beating Wall Street expectations. The report said that it generated $982 million in revenue in the quarter that ended on June 30, with adjusted earnings of 10 cents per share. Consensus analysts had expected the company to generate revenue of $845 million and a loss of 1 cent per share. In the same quarter, Daily Active Users (DAU), an important metric for social network companies, also increased by 55 million, representing a growth of 23%. This means that Snap added 293 million DAU in Q2 FY2021.
Microsoft Corp, Nvidia Corp, and Snap Inc. are also part of the Robinhood Top 100 Stocks. These are the platform’s most popular stocks among traders.
PS: This is not investment advice. This article is intended for information purposes only. Stock prices quoted herein can change at any time. We don’t own the copyright of the photos used in this article.