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?
XAt the moment, Apple (AAPL), Tesla (TSLA) and Google parent Pfizer (PFE) are standout performers. Unlike misfiring 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.
A stock market rally that kicked off 2022 soon fell on its face. The market is trying to rally again but has been struggling to make decisive progress. The Nasdaq has fallen back below the 50-day moving average while the S&P 500 is trying to cling onto its 200-day line. The Dow Jones Industrial Average has been testing its 50-day line.
The current uptrend is now under pressure, which means it is time to adopt a defensive posture. It is a bad time to making new buys, aside from exceptional breakouts in exceptional stocks. This is a bad time to be adding shares to existing holdings and it is a good time to get off margin, too. This is an ideal time to add names to one's watchlist though, with the names below being good candidates.
Remember, there is still significant headline risk going forward. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.
But 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 Apple stock, Tesla 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.
Apple Stock
AAPL stock is trading below a handle buy point in a double-bottom base. The ideal buy point here is 179,71.
Apple stock is seeking support just below its 50-day line after previously rebounding from its 200-day moving average. The relative strength line has just hit a new high. A protracted upwards spike could propel AAPL higher once again.
A key point in the favor of Apple stock is the fact it performed better than most stocks, especially techs, during the market pullback.
Apple has seen its Composite Rating shoot up to a strong 93 out of 99. Apple became the first company to reach a market capitalization of $3 trillion earlier this year, though it has now backed off this level.
The IBD Stock Checkup tool shows earnings growth is bouncing back in recent quarters following the Covid-19 pandemic. Apple stock got a boost after reporting earnings for Q1 of fiscal 2022.
It was the firm's best-ever quarter for revenue, with all categories excluding iPads coming in above views. Apple did not give guidance for the current quarter, though executives were relatively upbeat. The firm has not given specific quarterly guidance since the Covid-19 pandemic began.
Supply constraints meant supply could not keep up with demand. Another bright spot was sales in China, which grew 21% in the quarter.
Apple's EPS growth has averaged 65% over the past three quarters. This is comfortably clear of the 25% earnings growth sought by the CAN SLIM cognoscenti.
Analysts see earnings growth of 10% in fiscal 2022 and 7% growth in 2023. Investors will want to see CEO Tim Cook squeeze out more impressive gains.
With its iPhone business maturing, investors are looking for a new big growth driver for Apple stock. Services and wearables are seen as two key drivers.
In the September quarter, Apple's services revenue rose 26% year over year to $18.3 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.
One reason to be bullish on Apple is it continues to produce new products, which is a major success factor in the CAN SLIM system.
Earlier this month Apple hosted its latest product launch. The event, broadcast live online from Apple Park headquarters in Cupertino, California, saw a slew of products unveiled.
Perhaps most notable was a new low-cost 5G iPhone SE. It will retail for $429 and will hit store shelves on March 18.
Speculation continues that Apple is looking to make a self-driving electric car. In November Bloomberg reported Apple is aiming to launch self-driving EVs in 2025.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Tesla Stock
Tesla stock has formed a cup with handle with a 1,152.97 buy point according to MarketSmith analysis. The handle is appropriately deep given the 42% depth of the base. But a longer handle would let the 50-day moving average catch up.
However Tesla's relative strength line has backed off a bit after spiking at the start of last week.
A mixture of top class stock market performance and improving earnings have netted TSLA a mighty IBD Composite Rating of 95. Earnings are due April 20, which adds risk.
An approach highlighted by Investor's Business Daily is to use options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
The stock checkup tool underlines the improving financial performance. Earnings have grown by an average of 197% over the past three quarters, well clear of CAN SLIM requirements. Longer term results are also impressive, with its three-year EPS growth rate coming in at 211%.
Tesla stock got a boost last week after it opened its new factor in Austin, Texas. The $1.1 billion facility was unveiled at a glittering Cyber Rodeo event, where CEO Elon Musk boasted about its size.
"Giga Texas is the largest factory building in the world by volume," Musk said. He joked the firm had calculated "you could fit a 194 billion hamsters in this building."
The firm delivered a handful of Model Ys at its factory launch. Giga Austin Model Ys will be the first to feature Tesla's new structural battery pack and 4680 battery cells. They are not yet being mass produced, so key cost savings haven't been achieved.
Musk spoke for less than 30 minutes at Thursday's event, before several Model Ys were driven across the stage. Tesla's Cybertruck made an appearance afterwards, with Musk pointing out a new feature: It has no handles, as it is purportedly able to automatically sense when the driver is nearby. Musk said Tesla plans to begin production of the Cybertruck next year.
"This year is all about scaling up, and next year there is going to be a massive wave of new products," he said. Musk also touted the Roadster and Semi for next year.
Meanwhile the firm has been affected by rising Covid cases in China. The Tesla Shanghai factory has been shut down since March 28 due to strict government rules.
Tesla Shanghai is in the midst of its longest stoppage since it started production there in 2019. The plant produces more than 2,000 vehicles per day.
Bulls Still Rule These Areas; 5 Stocks Near Buy Points
Pfizer Stock
Pfizer stock is one to watch after it fell back below a trendline entry. It appears to be etching out a handle with a 56.42 buy point, 10 cents above its April 11 intraday high. That handle buy point is already there on a weekly chart.
The relative strength line is picking up again after a pullback. Moving back above recent highs would be a bullish sign.
It speaks to the stock's strong overall performance that Pfizer stock still holds a perfect IBD Composite Rating of 99.
Earnings have been accelerating for the past five quarters though. Strong results have been driving price performance, with PFE stock up more than 49% over the past 12 months
Its performance has attracted the attention of institutional investors, with its Accumulation/Distribution Rating coming in at B-.
In the fourth quarter, adjusted Pfizer earnings were $1.08 per share on $23.84 billion in sales. Earnings skyrocketed 152% and sales surged 105%. But the metrics were mixed with only profit beating analysts' estimates. Comirnaty generated $12.5 billion in sales, topping forecasts. Paxlovid brought in $76 million in sales, below broad calls for $143 million.
Revenue from blood thinner Xeljanz beat projections at $1.5 billion, up 19%. Sales of Xeljanz, a treatment for inflammatory conditions, and a heart-disease drug, Vyndamax, also came in above expectations at, respectively, $721 million and $561 million.
But sales of Pfizer's biggest cancer drug, Ibrance, fell 3% to $1.39 billion. Revenue from Prevnar, a pneumonia vaccine, also lagged at $1.3 billion. Sales fell 26% due to the timing of government orders, according to one analyst.
Pfizer and vaccine partner BioNTech (BNTX) are working on an omicron-specific booster. The FDA also just signed off on the companies' second booster shot for people age 50 and older and immunocompromised people as young as 12 at five months.
Pfizer is also seeking full approval for its vaccine in adolescents age 12-15. As it stands, the shot is fully approved only for age 16 and older, but it's authorized for children as young as 5. The shot for children age 5-11 is one-third the dosage given to older children, teens and adults.
Meanwhile, Pfizer recently inked a deal with Beam Therapeutics (BEAM) to test a newer form of CRISPR gene editing.
They will collaborate on three diseases of the liver, muscles and central nervous system. Pfizer will pay Beam $300 million up front and up to $1.05 billion in milestone payments.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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