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?
X
At the moment, Alphabet (GOOGL), Tesla (TSLA) and Johnson & Johnson (JNJ) are standout performers, at least relatively. 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. But the market is rallying once again after falling into correction status. But while the S&P 500, the Nasdaq and the Dow Jones Industrial Average are off 52-week lows they remain stuck below their 50-day moving averages. This means caution is still advisable.
With the market back in a confirmed uptrend investors can make stock purchases once again. Investors should concentrate their efforts on quality stocks, such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks below are good candidates.
Nevertheless, not all follow-through days lead to a sustained climb so get in gradually given the current uptrend is in the early innings.
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 Google stock, Johnson & Johnson stock and Delta 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 Stock
Google parent Alphabet has been struggling of late, according to MarketSmith analysis. However it managed to avoid undercutting recent lows and is now showing signs of life.
It has just reclaimed its 50-day moving average, though its is still stuck below its 200-day line. Its 50-day moving average fell underneath this key benchmark, which is a bearish sign.
The 200-day line coincides with a downward-sloping trendline from the Feb. 2 peak of 3,030.93. This could offer an early entry for the tech behemoth.
The relative strength line is turning higher again after hitting a 52-week low. The RS line gauges a stock’s performance compared to the S&P 500.
GOOGL stock has seen its IBD Composite Rating tumble to 66. This is due to lackluster market performance over the past 12 months.
Earnings outshine stock market performance, with its EPS Rating a very strong 95 out of 99.
Earnings have grown by an average of 49% over the past three quarters. This is well in excess of the 25% growth sought by CAN SLIM investors.
Google earnings per share for full-year 2022 are seen rising 11%, then rising a further 19% in 2023.
Big money has been shedding Alphabet stock of late. This is reflected in its Accumulation/Distribution Rating of E. Nevertheless, 42% of all stock is still held by funds.
Google stock vaulted higher after the firm announced a 20-for-1 stock split. It takes effect after the close on July 15.
In the first quarter, the company repurchased $13 billion of Google stock vs. $13.5 billion in the December quarter and $12.6 billion in the September quarter.
“After using up most of its previous authorization, Google topped up its buyback program in April with the board authorizing an additional $70 billion of repurchases,” said a recent Deutsche Bank report. “The new and incremental $70 billion authorization surpasses the prior $50 billion authorization announced in April 2021, and thus by extension is a larger portion of the company’s current market cap given the current drawdown across tech.”
Alphabet is projecting a “meaningful increase” in 2022 capital spending, reflecting investments in computer servers in internet data centers and construction of office space.
But GOOGL stock faces more difficult growth comparisons in 2022 as the coronavirus pandemic fades.
Google plans to utilize “contextual” technology that enables advertisers to target aggregated groups of consumers with similar interests, such as travel, sports or fashion.
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Tesla Stock
Tesla stock has formed a consolidation with a 1,152.97 buy point according to MarketSmith analysis. TSLA stock jumped an impressive 13.4% last week.
It remains a long way from its entry, which makes TSLA one to watch for now. Nevertheless, if it can rally and retake its 50-day moving average this could be used as an early entry. The EV giant did move above its 21-day line last week.
At the end of this coming week, Tesla will likely release second-quarter production and delivery figures. This could be a catalyst for an upwards move. Production and deliveries will almost certainly show a substantial decline vs. Q1 due to a Tesla Shanghai shutdown and lengthy recovery.
Tesla‘s relative strength line has backed off a bit since early April but is now trying to fight back.
Lackluster recent stock market performance has overshadowed improving earnings. This has caused TSLA to see its IBD Composite Rating fall to 70 out of 99.
The stock checkup tool underlines the improving financial performance. Earnings have grown by an average of 203% 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 210%.
The firm posted its latest earnings in April. Quarterly profit soared 246% to $3.22 a share, well above the $2.26 FactSet consensus. Revenue jumped 81% to $18.76 billion vs. the $17.595 billion consensus. It remains well shy of a 1,152.97 entry.
Tesla Shanghai, which had been closed for more than three weeks amid the city’s ongoing China lockdown, recently restarted limited production. It’s unclear when full output will return.
Tesla opened its Berlin factory in March and Austin plan in early March. Production will ramp up slowly.
Some Giga Austin Model Ys boast a new structural battery pack and 4680 batteries. The 4680 batteries are not yet being mass produced, so key cost savings haven’t been achieved.
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Johnson & Johnson Stock
JNJ stock sits in the buy zone above a double-bottom base with a buy point at 181.84. Johnson & Johnson stock has retaken its 10-week moving average with aplomb.
Shares have rallied after finding support at the 200-day line. It has also passed the late May short-term high of 181.74.
The relative strength line has just hit a fresh 52-week high and is just off levels last seen in late 2020. Strong all-around performance has netted it an IBD Composite Rating of 95 out of 99.
JNJ stock rose after the firm beat Q1 earnings views on April 19, hitting a record high a few days later. EPS rose 3% to $2.67 while analysts forecast $2.55 per share. Sales of $23.43 billion missed estimates though.
During its first-quarter report, Johnson & Johnson trimmed its full-year outlook for 2022. The firm expects to earn $10.15-$10.35 per share on $94.8 billion to $95.8 billion in sales.
For the year, JNJ stock analysts call for adjusted profit of $10.55 per share on $99.63 billion in sales. Both measures would climb less than 10% year over year.
JNJ is moving to separate its consumer health division into a new company. This will allow J&J to focus on high-growth products, including its drugs and medical devices. In 2021, those units generated more than $79 billion in sales. This more focused approach could lead to bigger gains in the future.
The company’s fundamentals are improving, and litigation risk is starting to lessen.
Last year, Johnson & Johnson brought in $93.78 billion in sales, popping close to 14%. The company also reported adjusted profit of $9.80 per share, surging 22%.
Meanwhile, Johnson & Johnson is now emerging from under a cloud of legal woes.
Earlier this year, the company agreed to pay $5 billion to settle claims it contributed to the opioid crisis in the U.S. Drug distributors AmerisourceBergen (ABC), Cardinal Health (CAH) and McKesson (MCK) will pay $21 billion.
Further, Johnson & Johnson added another $99 million settlement in West Virginia in April.
J&J also recently spun out its talcum powder business following claims its compound led people to develop cancer. Then, the new company immediately filed for bankruptcy. Before that, J&J pulled its baby powder brand from shelves in the U.S. and Canada.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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