Last year’s pandemic-induced lockdowns and stay-at-home mandates led many people to take up securities trading as a hobby. As a result, the commission-free trading app Robinhood of Robinhood Markets, Inc. (HOOD) gained significant popularity, especially among Millennial and Gen Z traders.
Its popularity among first-time traders has helped Robinhood thrive. The company went public through a traditional IPO on July 29. Bolstered by its popularity, the company’s second-quarter revenue increased 131.5% year-over-year to $565.33 million. Furthermore, Robinhood reported 21.3 million monthly active users as of June 30.
The interest of HOOD investors in Apple Inc. (AAPL), Microsoft Corporation (MSFT), and Pfizer Inc. (PFE) is evidenced by these names’ placement within the top 20 stocks on the Robinhood Top 100 list. Considering their dominant market shares and strong fundamentals, we think these stocks could be solid additions to one’s portfolio now.
Apple Inc. (AAPL)
AAPL is the maker of iPhones, iPads, and other products, and is the first company to attain a $2 trillion market capitalization. AAPL ranks at #11 based on popularity on the Robinhood Top 100 list.
On October 4, AAPL announced that orders for the new Apple Watch Series 7 were to begin being filled on October 8, and the product will be available in stores beginning October 15. Given the company’s immense brand popularity worldwide, this new series with enhanced features is expected to be a hit with consumers.
On September 28, the company updated its iWork suite of productivity apps, improving their features to be more appealing to users. This should enhance the user experience while also attracting new users.
In its fiscal third quarter, ended June 26, AAPL’s total net sales increased 36.4% year-over-year to $81.43 billion. This can be attributed to a 49.8% year-over-year improvement in iPhone sales to $39.57 billion. In addition, the company’s net income was $21.74 billion, indicating a 93.2%increase from the prior-year quarter, while its EPS rose 100% from the same period last year to $1.30.
A $5.59 consensus EPS estimate for the current year (its fiscal 2021) indicates a 70.4% year-over-year increase. Likewise, the $366.49 billion consensus revenue estimate for the current year reflects a 33.5% improvement from the prior year. Furthermore, AAPL has an impressive earnings surprise history; it has topped the consensus EPS estimate in each of the trailing four quarters.
The stock has gained close to 25% in price over the past year and about 10% over the past six months.
AAPL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AAPL has a Sentiment and Quality grade of B. In the 47-stock, B-rated Technology – Hardware industry, it is ranked #22. Click here to see the additional POWR Ratings for AAPL (Growth, Value, Momentum, and Stability).
Microsoft Corporation (MSFT)
MSFT is a software behemoth that provides software services, solutions, and devices worldwide. The company has a more than $2 trillion market capitalization. It is currently ranked #2 in the Robinhood Top 100 list.
On October 7, MSFT acquired Objectives and Key Results (OKR) company Ally.io as a part of its employee experience platform (EXP). The acquisition is expected to enhance MSFT’s business outcomes by enriching its EXP, Microsoft Viva, in aligning employee work with the company’s strategies.
MSFT’s total revenue increased 21.3% year-over-year to $46.15 billion in its fiscal fourth quarter, ended June 30. Its operating income climbed 42.4% from the prior-year quarter to $19.10 billion. Its net income and EPS stood at $16.46 billion and $2.17, respectively, registering 46.9% and 48.6% year-over-year increases, respectively.
Analysts expect MSFT’s EPS to improve 9.2% year-over-year to $8.79 in the current year (fiscal 2022), while the Street’s $192.07 billion revenue estimate for the current year indicates a 14.3% rise from the prior year. In addition, the stock has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.
MSFT’s stock has gained approximately 40% in price over the past year. It has also gained more than 30% year-to-date.
MSFT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating which translates to Buy in our POWR Rating system.
The stock has an A grade for Sentiment, and a B grade for Stability and Quality. It is ranked #17 of 158 stocks in the Software – Application industry. To see the additional POWR Ratings for Growth, Value, and Momentum for MSFT, click here.
Pfizer Inc. (PFE)
PFE is a popular developer and distributor of biopharmaceutical products that include medicines, vaccines, and other therapies. The company developed the widely used Pfizer-BioNTech COVID-19 vaccine with BioNTech SE (BNTX). It is ranked #18 in the Robinhood Top 100 list.
On September 30, PFE received Japanese Ministry of Health, Labour, and Welfare (MHLW) approval for its CIBINQO® (abrocitinib) for the treatment of atopic dermatitis (AD) in adults and adolescents. The CIBINQO will be available in Japan in two separate doses and should improve PFE’s revenues in the near term.
On September 28, PFE and BNTX declared that they had submitted robust results from a Phase 2/3 trial of their COVID-19 vaccine to the U.S. Food and Drug Administration (FDA), seeking an Emergency Use Authorization (EUA) applicable for children five to less than 12 years of age. If approved, the vaccine is likely to be highly beneficial for the companies given the large, unvaccinated child population.
For its fiscal second quarter, ended July 4, PFE’s revenue increased 92.4% year-over-year to $18.98 billion. Its adjusted income rose 75.2% from the prior-year quarter to $6.08 billion, while its adjusted EPS was $1.07, up 72.6% from the same period last year.
The Street’s EPS $1.06 estimate for the current quarter (ending December 2021) indicates a 152.4% increase from the prior-year quarter. Likewise, the $25.06 billion consensus revenue estimate for the current quarter reflects a 114.5% year-over-year improvement. Additionally, PFE has topped the consensus EPS estimates in three out of the trailing four quarters.
The stock has gained more than 20% in price over the past year and roughly 18% over the past six months.
It’s no surprise that PFE has an overall A rating which equates to Strong Buy in our proprietary POWR Rating system. The stock has a Growth, Value, Sentiment, and Quality grade of B. It is ranked #5 out of 210 stocks in the Medical – Pharmaceuticals industry.
In addition to the POWR Rating grades we’ve stated above, one can see PFE ratings for Momentum and Stability here.
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AAPL shares were trading at $139.80 per share on Wednesday morning, down $1.71 (-1.21%). Year-to-date, AAPL has gained 5.85%, versus a 17.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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