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, Meta Platforms (META), Tesla (TSLA) and Microsoft (MSFT) are standout performers, at least relatively.
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.
A stock market rally that kicked off 2022 soon fell on its face. The market overall has been choppy since then, with bear market rallies often being undercut by painful drawdowns. While the Nasdaq looks healthy, the S&P 500 has fallen under the 50-day moving average following challenging broader trading sparked by negative action among bank stocks.
The stock market is currently in the grip of a correction. Now is a time to avoid buying stocks altogether. You should also be entirely off margin.
It is crucial to stay on top of sell signals. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving averages.
Now is a time to prepare for the next stock market uptrend by creating a robust watchlist. Focus on fundamentally strong stocks coming out of sound chart patterns, such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks below are good candidates.
Remember, there is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.
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 Meta stock, Tesla stock and Microsoft stock in more detail. An important consideration is that these stocks are solid from a fundamentals 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.
Meta stock is trading near the top of a buy zone above a flat base ideal entry point of 197.26.
The flat base formed as the stock held support at the 21-day exponential moving average.
The social network is a turnaround story amid declining earnings and revenue. This year, annual profit is expected to rise 12%, with growth accelerating in 2024, up 21%.
Lackluster earnings are reflected in an EPS Rating of 48 out of 99. Despite this, growing bullish sentiment is reflected in the fact it is in the top 4% of stocks in terms of price performance over the past 12 months.
Meta lost roughly $10 billion in ad revenue last year due to Apple (AAPL) amending privacy policies for the iPhone. This made it more difficult to accurately target users with ads.
But Meta has made technology improvements with its new ad strategy.
Meta, like all social media companies, is struggling due to a sharp reduction in advertising. In addition, companies are squirming over macroeconomic concerns, fears of a recession and higher interest rates. This is happening as Facebook is spending billions on a risky bet to build the “metaverse,” a virtual reality world that has yet to take hold.
In November, Meta cut 11,000 employees, or 13% of its workforce. Meta stock is up 20% since then.
In March, Meta announced plans to cut 10,000 jobs.
Chief Executive Mark Zuckerberg, in a statement with the Q4 earnings report said, “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”
Tesla stock is also one of the best Robinhood stocks to buy now or put on a watchlist. It is still forging a bottoming base, below the 200-day line. But that key level is now below the potential 217.75 buy point.
TSLA stock is pulling away from its 50-day line and is just above the 21-day exponential moving average. Its next task is to retake the 200-day line and buy point.
It comes after the stock staged a powerful run in January to mid-February. It remains up more than 76% so far this year.
The popular stock has a robust IBD Composite Rating of 86 out of 99. Earnings have turned into a key strength, with the stock holding a rare perfect EPS Rating of 99.
Earnings have grown by an average of 56% over the past three quarters. It also boasts four consecutive years of EPS growth.
The company reported mixed fourth-quarter results on Jan. 25, bearing on earnings but missing on revenue. The firm’s eccentric CEO Elon Musk helped boost the stock though, saying he was bullish about 2023 and that the firm might be able to produce 2 million cars this year.
Mizuho analyst Vijay Rakesh maintained his buy rating and price target of 250 after the most recent Tesla earnings report.
“Despite a growing number of competitors in the electric vehicle market,” Rakesh said, “we believe Tesla remains the global EV leader with key advantages in its vertical integration driving stronger margins as well as self-driving technology.”
In mid-January, Tesla announced some significant price cuts in the U.S. and Europe. The cuts ranged from 6% to 20% for Model 3 and Model Y.
Tesla held its much-hyped Analyst Day event earlier in March, though investors were left underwhelmed when a new car failed to materialize. Nevertheless, the firm reaffirmed its long-term goal to sell 20 million vehicles annually.
In early December, Tesla unveiled its long awaited Semi, an 18-wheel, long-haul electric freight truck, five years after it was first announced. Tesla began delivering its long haul Semi trucks to fizzy drink behemoth PepsiCo (PEP) that same month.
MSFT stock is trading in a buy zone after retaking a flat base entry of 276.86. It took what could be a healthy pause to consolidate recent gains as it looks to push higher.
The relative strength is just off highs after it went a solid run for several weeks. It is in the top 15% of stocks in terms of price performance over the last 12 months.
Overall impressive performance is reflected in its IBD Composite Rating of 94 out of 99. The firm has seen earnings grow by an average of 23% over the past three years, impressive growth for such a large firm.
Big Money has been snapping up MSFT stock of late, with its Accumulation/Distribution Rating coming in at B+.
In late January Microsoft reported mixed results for the December quarter and gave disappointing guidance. EPS slid 6% to $2.32 a share while sales rose 2% to $52.7 billion.
But this was overshadowed on Feb. 7 when Microsoft showed off its new Bing search engine and Edge web browser that use AI technology. Microsoft hopes the OpenAI-based technology can help Bing chip away at Google’s dominance in the internet search market. MSFT stock jumped 4.2% on the news.
Microsoft stock was given a flurry of price-target hikes from analysts after the presentation. ‘
The firm kept up the momentum by last week it is adding artificial intelligence tools to its popular Office productivity applications.
It comes after the Microsoft announced a investment, reportedly worth $10 billion, in artificial intelligence startup OpenAI.
The software giant is providing its Azure cloud computing infrastructure for OpenAI. It also is adding OpenAI models to its consumer and enterprise software products.
Excellent sustained performance has netted Microsoft stock a spot in the IBD Long-Term Leaders Portfolio.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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