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, Alphabet (GOOGL), Johnson & Johnson (JNJ) and Delta Air Lines (DAL) 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. The most recent attempt to rally has recently failed, resulting in a return to market in correction status. The S&P 500, the Nasdaq and the Dow Jones Industrial Average all undercut 52-week lows once again.
With the market back in a correction investors should avoid buying stocks altogether. Investors must start raising cash. You should be entirely off margin.
Investors should remain engaged though, and now is a good time to look for quality stocks too add to one’s watchlist. Candidates include those in the IBD 50. These will tend to have rising relative strength lines. The names 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 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 parent Alphabet has been struggling of late, according to MarketSmith analysis. However it hasn’t undercut recent lows, which is a positive.
It has fallen back beneath its 200-day line. Its 50-day moving average has also fallen underneath this key benchmark, which is a bearish sign.
The relative strength line is trying to turn higher again in June 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.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Johnson & Johnson Stock
JNJ stock has formed a flat base with an ideal entry of 186.79. It comes after shares broke out of a double-bottom base with a buy point at 173.72 on March 14. Johnson & Johnson stock has tumbled below its 50-dayline and recently undercut the old double-bottom buy point.
Shares have been trying to find support at the 200-day line. Progressing from here and retaking the 50-moving average is key going forward. That could offer an early entry, or passing the late May short-term high of 181.74.
While JNJ stock is near the flat base’s low, the consolidation is only 10% deep.
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 88 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.
Stocks Rally After Brutal Week But Be Careful Of This
This is one to watch in case the market turn around. With demand for air travel increasing after the Covid pandemic, it could go on to enjoy better fortunes.
At the moment it needs to retake its major moving averages. If it can move above the 50-day line it would offer an early entry.
The recent consolidation since late April is long enough to be a proper base on a weekly chart. More broadly, the 45-46 area has acted as resistance several times over the past year.
DAL stock reclaimed its 50-day and 200-day lines in late May, as JetBlue (JBLU) and Southwest Airlines (LUV) lifted forecast with bullish forecasts on second-quarter revenue. That followed similar guidance from United Airlines (UAL).
A few days later, Delta Air Lines and a few other carriers gave upbeat Q2 revenue outlooks, but airline stocks have been significant losers in the past few weeks. Delta stock fell back below its 50-day and 200-day lines.
Delta has said it would cut flights this summer amid staffing issues. And airlines are dealing with rising fuel costs as Russia’s war in Ukraine continues.
While travel demand has remained strong, slowing economic growth and high inflation could take a toll on flights and fares.
Investors will want to see some improvement in DAL stock before taking the plunge. At the moment its Composite Rating is far from ideal.
There has been a split in stock market and earnings performance. While the stock has soared earnings remain in the dumps due to the Covid pandemic.
The stock is actually positive so far in 2022 even as earnings have shrunk on average over the prior three quarters. They did pop by 65% in the most recent quarter though, and are expected to continue to rebound.
The airline said that the service issues it was facing — be it short staffing, weather or Covid — had led to historic disruptions.
“More than any time in our history, the various factors currently impacting our operation — weather and air traffic control, vendor staffing, increased COVID case rates contributing to higher-than-planned unscheduled absences in some work groups — are resulting in an operation that isn’t consistently up to the standards Delta has set for the industry in recent years,” Allison Ausband, Delta’s chief customer experience officer, said in a statement.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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