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, Apple (AAPL), Tesla (TSLA) and Exxon Mobil (XOM) 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 tried to rally but has just fallen back into correction territory. The S&P 500 has undercuts its April lows and the Nasdaq is back near its lows for the year. The Dow Jones Industrial Average has also fallen below the key 200-day and 50-day moving averages.
The market is now in the grip of a correction. This means you should avoid buying stocks altogether. Instead, it is a good time to start raising cash – start by selling your weakest performing stocks first. If you have great conviction about a stock and have a profit cushion, consider holding through the correction. You also move entirely off margin.
But you should stay engaged with the market and get to work on building a robust watchlist. Looks for stocks contracting less than others or less than the main indexes. These will tend to have rising relative strength lines. The names below are 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 Exxon Mobil 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.
AAPL stock is trading below a handle buy point in a double-bottom base. The ideal buy point here is 179.71.
Retaking its 50-day line will be crucial. It previously broke through this level after rebounding from its 200-day moving average. The relative strength line is near highs. 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 92 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.
Investors should resist the urge to buy until it reports earnings. Apple will be looking to maintain good earnings performance when it reports its latest results on Thursday.
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 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.
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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. As the stock continues to consolidate below its handle it is allowing the 50-day moving average to catch up.
Tesla’s relative strength line has backed off a bit since early April, but rose last week.
A mixture of top class stock market performance and improving earnings have netted TSLA a mighty IBD Composite Rating 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 has just reported its latest earnings. 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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Exxon Mobil Stock
Exxon Mobile stock is also worth adding to your watchlist. It is currently working on a shallow cup base with a 91.60 buy point, according to MarketSmith analysis. It is also offering a lower handle entry of 89.90 on its weekly chart.
The stock is getting set to report earnings on April 29, so having the flexibility of a higher entry could be a benefit.
The relative strength line has been picking up again following a brief dip. It could soon approach its March high, which was the strongest in 11 months.
XOM stock has a perfect Composite Rating of 99. Stock market performance is increasingly bullish, with the stock rising 34% since the start of the year.
Improving earnings performance gives added credibility to a bullish outlook on Exxon Mobil stock.
XOM stock in late April topped Wall Street expectations. EPS rose 23% to 65 cents, which was better than the 11% rise to 59 cents expected by analysts. Revenue rose 5% to $59.15 billion revenue, while it had been expected to fall 2% to $55.2 billion. Both were the first year-over-year gains in years.
Operating cash flow also rose, popping 48% to $9.3 billion. This allowed debt reduction of more than $4 billion.
Production was 3.8 million oil-equivalent barrels per day, down 6.4% from a year ago but up 3% from Q4. Permian Basin production rose 12% to 394,000 oil-equivalent barrels per day.
Exxon maintained its 2021 capital spending program at $16 billion-$19 billion. In addition to $3 billion in cost cuts in 2020, the company is on pace to achieve $3 billion in more cuts through 2023.
“Cash flow from operating activities during the quarter fully covered the dividend and capital investments, and we strengthened the balance sheet by reducing debt,” said Chairman and CEO Darren Woods.
Exxon’s latest earnings report is due Friday, an opportunity to gauge how the firm is benefitting from the current energy environment.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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