Investors in Robinhood Markets (NASDAQ:HOOD) stock have not had much to celebrate since the company went public in July 2021. In fact, shares are down nearly 60% over the past six months. Yet, most market participants pay more attention to what users of the Robinhood app buy and sell more than price swings in HOOD stock. Why? Because these Robinhood stocks provide a window into the daily happenings on Wall Street through one of the most popular trading platforms available.
In less than a decade since its launch, the online trading platform has exceeded well over 22.5 million investors and traders who use the app. Therefore, Wall Street pays close attention to which shares Robinhood users put their money into. Retail investors are likely to look at popular Robinhood stocks for inspiration in their search for the next stock market champions of 2022.
Yet, regular InvestorPlace.com readers may already know that a number of Robinhood stocks are not necessarily appropriate for most retail portfolios. For example, meme and penny stocks in high-risk industries account for a significant portion of the top-traded list on the platform.
A number of critics even suggest Robinhood has transformed stock trading into an addictive game for retail investors. Therefore, it’s essential to evaluate the overall financial health of those Robinhood stocks that are particularly popular with retail investors.
So, with that information, here is our list of seven Robinhood stocks that deserve your attention in the new year.
- Airbnb (NASDAQ:ABNB)
- GameStop (NYSE:GME)
- General Motors (NYSE:GM)
- Moderna (NASDAQ:MRNA)
- Starbucks (NASDAQ:SBUX)
- Sundial Growers (NASDAQ:SNDL)
- Tesla (NASDAQ:TSLA)
Now, let’s dive in and take a closer look at each one.
Robinhood Stocks: Airbnb (ABNB)
San Francisco, California-based Airbnb is the largest online alternative accommodation platform in the world. It offers a convenient way to explore and book a wide range of homes and experiences, connecting guests with more than 4 million hosts worldwide.
Despite pandemic-related challenges, Airbnb announced record third quarter of fiscal year 2021 results in early November. Revenue increased 67% year-over-year (YOY) to $2.24 billion. Additionally, net income crushed expectations, soaring 280% YOY to $834 million, or $1.22 per diluted share. Cash and equivalents ended the period at $5.9 billion.
Strong demand due to summer travel reservations helped boost profit margins and marked the company’s most profitable quarter in its history. Given the rising interest in remote work, long-term stays represent a significant growth opportunity. Management anticipates the demand for long-term stays to grow further.
The omicron variant has recently restrained ABNB stock, which currently trades at $162, down 23% from its record high seen in February 2021. Nonetheless, ABNB stock is still up 13% over the past six months. Despite the recent dip, shares still command a premium price at 139 times forward earnings and 21.2 times trailing sales. The 12-month median price forecast for Airbnb stock stands at $194.
GameStop (GME)
Grapevine, Texas-based GameStop is a video game and consumer electronics retailer with brick-and-mortar stores and an e-commerce presence. GME stock made headlines in 2021 as it sparked retail investor interest in short-squeeze stocks last year. As a result, it has become one of the leading meme stocks of the past year.
Gamestop issued Q3 2021 results in early December. Net sales increased 29% YOY to $1.3 billion. Yet, net loss widened to $105.4 million, or $1.39 per diluted share, compared to a net loss of $18.8 million, or 29 cents per diluted share, a year ago. Cash and equivalents ended the period at $1.4 billion.
Retail investors who hold this meme stock are potentially expecting another short squeeze now that shares have pulled back about 70% from their all-time high. They’re also counting on seeing an improvement in revenue given its investments in digital gaming.
Its brick-and-mortar stores have become a drag in its financial performance. Higher margins derived from digital gaming and lower costs from a smaller store base should eventually bring GameStop back to profitability.
However, there is still uncertainty regarding the company’s strategy to gain market share in the digital gaming space. As this is a gradual process, GME stock could come under further pressure in 2022.
The stock surged by nearly 700% in 2021. It now hovers at $115, up 266% in the last 12 months. Shares are currently trading at 1.89 times trailing sales. But the 12-month median price forecast for Gamestop stands at $45.
Robinhood Stocks: General Motors (GM)
With its Buick, Cadillac, Chevrolet, GMC and Holden brands, the legacy automaker General Motors needs little introduction. Management has also been investing in a robust pipeline of electric vehicles (EVs), and set a floor target of one-million EV sales for 2025.
The car manufacturer released Q3 2021 results in late October. Revenue declined 25% YOY to $26.78 billion. Net income came in at $2.42 billion, or $1.62 per diluted share, down from net income of $4.05 billion in the previous year. Cash and equivalents ended the quarter at $21.65 billion.
On the results, CEO Mary Barra remarked, “… we now believe GM’s full-year results will approach the high end of our guidance, which is for EBIT-adjusted in the range of $11.5 billion to $13.5 billion, well above the $10 billion to $11 billion outlook we shared in February.”
The company has started deliveries of its Hummer EV pickup and BrightDrop EV600 vehicles. In addition, the new Chevrolet Silverado EV pickup truck is expected to launch in 2023. However, the near-term boost for GM stock may come from its Cruise self-driving unit. The autonomous-vehicle technology company is waiting for final approval to launch a commercial robotaxi service in San Francisco.
GM stock hovers at just under $61, up 25% over the past year. Shares trade for a rock-bottom valuation of 8.9 times forward earnings and 0.7 times trailing sales. The 12-month median price forecast for General Motors stock stands at $74.
Moderna (MRNA)
Biotechnology group Moderna came to prominence as one of the names that produced a vaccine against the Covid-19 virus. It is also focused on developing other messenger RNA (mRNA) therapeutics and vaccines for infectious, cardiovascular and immuno-oncology diseases as well.
Moderna reported Q3 2021 results in early November. Revenue came in at $5 billion, compared to $157 million for the same period last year. Net income stood at $3.3 billion, compared to a net loss of $232 million a year ago. Cash and equivalents ended the period at $15.3 billion.
The biotech group anticipates full-year 2021 revenue of $15 billion to $18 billion from its Covid-19 vaccine. Given rising concern regarding new variants, analysts forecast coronavirus vaccine sales to remain high in 2022.
In addition, Moderna is progressing with 37 mRNA products in the pipeline, including vaccines for Zika, HIV and the seasonal flu. The phase 3 cytomegalovirus vaccine is the closest candidate to hit the market. Even if a small portion of these products makes it to the market, investors are likely to see a significant surge in top line growth.
MRNA stock hovers slightly above $205, and has soared 65% in the last 12 months. Shares trade at 10.6 times forward earnings and 9.2 times trailing sales. The 12-month median price forecast for Moderna stock stands at $304.
Robinhood Stocks: Starbucks (SBUX)
Seattle, Washington-based Starbucks is one of the most popular roasters and retailers of specialty coffee, with operations in over 80 countries. Analysts concur that the coffee giant adapted well to the pandemic, focusing on digital ordering and contactless pickup in numerous locations.
Starbucks issued Q4 2021 and full-year results in early October. Revenue grew 31% YOY to $8.1 billion. Net earnings came in at $1.8 billion, or $1.49 per diluted share, compared to $392.6 million, or 33 cents per diluted share, in the prior-year quarter. Cash and equivalents ended the period at $6.46 billion.
Management also noted, “Global comparable store sales increased 17%, driven by a 15% increase in comparable transactions and a 2% increase in average ticket.” Moreover, Starbucks plans to return $20 billion to shareholders via its dividend and new share buyback program.
Furthermore, Starbucks Rewards members accounted for 51% of domestic revenue in the fourth quarter, suggesting high brand loyalty among its customers. Active Rewards program members increased 28% YOY to almost 25 million during the recent quarter.
SBUX stock hovers at $100 territory, down about 3% over the past year. Year-to-date, it has declined almost 15%. Investors may use the recent dip to buy SBUX shares, which are trading at 34 times forward earnings and 4.8 times trailing sales. The 12-month median price forecast for Starbucks stock stands at $125.
Sundial Growers (SNDL)
Canada-based Sundial Growers grows and sells cannabis in various marketable forms. Recently, it has also entered into an agreement to acquire Alcanna, Canada’s largest private liquor retailer with a majority stake in a prominent cannabis retailer in Canada. The acquisition could provide Sundial with the largest cannabis retail footprint in Canada, with roughly 180 stores.
Sundial Growers announced Q3 2021 results on Nov. 11. Revenue from the cannabis segment came in at 14.4 million CAD, up 12% YOY. For the quarter, net earnings stood at 11.3 million CAD, compared to a 71.4 million CAD loss in the prior-year quarter. Cash and equivalents ended the period a $1.1 billion CAD.
The company posted a profit in its latest quarter, driven by an increase in sales prices, falling expenses and rising yields. The gross average selling price of cannabis in the third quarter surged more than 20% YOY.
However, SNDL stock isn’t for risk-averse investors. Bearish analysts suggest that other cannabis stocks may offer better risk-reward profiles. Considering that marijuana remains illegal at the federal level in the U.S., we should remind potential investors that Sundial is prohibited from competing stateside.
SNDL stock currently trades at around 56 cents. Overall, they are down 14% in the past 12 months. Despite a depressed stock price, SNDL is still trading at 23.2 times trailing sales, higher than its peers in the cannabis space. The 12-month median price forecast for Sundial Growers stock stands at 85 cents.
Robinhood Stocks: Tesla (TSLA)
Our final stock for today is the EV heavyweight Tesla. It released Q3 2021 results in late October. Revenue went up by 57% YOY to $13.76 billion. GAAP net income was $1.62 billion in (GAAP), compared to $331 million a year ago. Adjusted earnings per share (EPS) came in at $1.86. Cash and equivalents ended the period at $16.1 billion.
Following the announcement, CEO Elon Musk cited, “The third quarter of 2021 was a record quarter in many respects. We achieved our best-ever net income, operating profit and gross profit.”
Despite the global chip shortage, Tesla delivered around 936,000 vehicles last year, representing an 87% increase YOY. Moreover, the EV maker could see more record quarters in 2022, thanks to the launch of Model Y production at its new factory in Austin. This state-of-the-art facility could double production capacity to 2 million vehicles in 2022.
Furthermore, the production of the Tesla Semi is expected to start this year. Management also anticipates bringing a fully autonomous EV with self-driving software to the market by 2024.
The EV maker is currently around three times more profitable than most legacy automakers, with a net profit margin above 7%. Moreover, as the EV maker grows in size, it should enjoy increasing economies of scale, leading to further improvement in profitability.
TSLA stock hovers around $1,050 territory, up 23% in the past year. Yet, shares do not look cheap at 122 times forward earnings and 24.7 times trailing sales. The 12-month median price forecast for Tesla stock stands at $1020.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.