Do you trust the crowd using Robinhood Markets‘ (HOOD 11.70%) trading app? It would be understandable if you didn’t. The track record for crowd-sourced stock picks from users of the trading platform has been hit or miss, at best.
Retail investors have come a long way in their stock picking in just the past few years, though, and Robinhood’s customers in particular. While arguably more aggressive than the average investor, these folks still have a preference for widely recognized names and quality blue chips.
Here’s a closer look at three of their most widely held picks right now that would likely be at home in your portfolio.
1. PayPal Holdings
The past few months have been rough for most stocks, but they’ve been downright awful for PayPal Holdings (PYPL 9.25%). Share prices of the online payment powerhouse are down about 68% from last year’s peak thanks to a rekindling of in-person shopping and the continued rollout of competing fintech platforms.
The PayPal sellers, however, have overshot their target.
Sure, any other payment middleman poses a threat to PayPal’s dominance. Knocking off the industry’s biggest player is no easy task, though. Neither is dethroning the name that effectively founded the online payment industry. The company still controls about half of this market despite the entry of competing services. And, despite these new digital payment options, profitable PayPal is expected to still grow its top line to the tune of 11% this year before accelerating its revenue growth by 16% next year, en route to record-breaking profits of $4.74 per share in 2023. The stock’s pullback over the course of the past 12 months prices in far more pessimism than is merited.
With all of that being said, would-be investors may want to move quickly. As of last month, the steep sell-off had dragged shares to new multiyear lows, including below its early 2020 nadir of $82.07, when COVID-19-fueled panic-selling was upending everything. There’s little chance this company or its shares are worth less now than they’ve been at any point in the past several years, however, which at least partially explains the stock’s persistent strength since last month’s low. This effort may well mark a bigger turning point for PayPal shares.
2. Ford Motor Company
For years, shares of Ford Motor Company (F 3.50%) floundered, and rightfully so. Between the so-called “peak auto” sales climax of 2016, the subsequent deterioration of Ford’s fiscal results, the advent of electric vehicles that Ford wasn’t entirely ready for, and then the disruption of automobile manufacturing’s supply chains, there was little for investors to like.
Ford’s foreseeable future, however, is looking much better than its recent past.
Perhaps the biggest reason for optimism is the company’s ramped-up efforts on the EV front. Ford had already committed to $30 billion worth of investments in its electric vehicle business, but in March of this year upped that figure, aiming to deploy to $50 billion by 2026. By 2030, up to half of its automobile production (and no less than 40%) is expected to be electric vehicles.
And it’s off to a great start on this front. The company’s battery-powered Mustang Mach-E replaced Tesla‘s Model 3 as Consumer Reports’ favorite EV for 2022, while demand for its battery-powered F-150 Lightning pickup truck has been so strong that Ford was forced to stop taking reservations for it.
In the meantime, the company’s combustion-powered automobile business is doing well enough despite supply chain woes. Last quarter’s top line of $40.2 billion didn’t just top depressed numbers reported in the midst of the pandemic. That figure’s back within sight of the company’s pre-pandemic sales levels, and was the best second-quarter revenue Ford’s ever produced. Next year’s projected top line of $159.3 billion, in fact, is just $1 billion shy of Ford’s best-ever 12-month sales of $160.3 billion, which it achieved in 2018. Clearly, the company’s doing something right.
Finally, add Microsoft (MSFT 2.78%) to the list of stocks that Robinhood users love that you may want to consider as well.
Anyone keeping tabs on the software giant will likely know Microsoft’s recently ended fourth quarter was a bit disappointing. Per-share earnings of $2.23 and revenue of $51.9 billion both fell short of estimates of $2.29 per share and $52.4 billion, respectively. A combination of adverse exchange rates and waning consumer spending — particularly on PCs — accounted for much of the shortfall, although its cloud computing operation experienced some headwinds as well. In short, like most others, this company’s starting to feel the fallout from economic weakness, so much so that last month it even began laying off a small number of its employees. It’s also slowing its hiring.
There’s a reason Microsoft’s stock has rallied rather than pulled back since reporting this news, however: All of these problems were already factored into the stock’s price — and then some. Analysts still expect top-line growth of 11% this year to accelerate to more than 14% next year, setting the stage for record-breaking earnings of $12.11 per share in 2023.
That growth outlook isn’t tough to believe, either. Despite last quarter’s lackluster results, Microsoft’s Windows is still the operating system installed on three-fourths of the world’s computers, according to Global Stats, while the company’s productivity software like Word, Excel, and Outlook remains the go-to choice for both companies and consumers. Meanwhile, market research outfit Canalys estimates Microsoft’s cloud business is gaining share on rival Amazon. Namely, Microsoft’s cloud revenue growth of 40% during the second calendar quarter of the year leaves it with a 24% share of a cloud market that Precedence Research believes will grow by an average of more than 17% per year through 2030.
In short, Microsoft’s got plenty of growth runway ahead of it.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, PayPal Holdings, and Tesla. The Motley Fool has a disclosure policy.