Founded only in April 2013, the Robinhood platform has become quite popular among the masses. It rose to fame by offering commission-free trades, no account minimums, and an easy-to-use mobile app. Built with the aim that everyone should have access to the financial markets, the platform leverages technology to encourage everyone to participate.
Leaving controversies aside, the Robinhood 100 List is quite popular and is created based on how many users own each stock. Whether the stocks listed there are investment worthy or not is up for discussion, but a listing on Robinhood’s 100 List means that it has created some buzz in the market.
Alibaba Group Holding Ltd (BABA), Facebook, Inc. (FB), Netflix, Inc. (NFLX), and Activision Blizzard, Inc (ATVI) are four such Robinhood-listed stocks that are expected to gain in the upcoming quarters based on their fundamental strength.
Alibaba Group Holding Ltd (BABA)
Dominating the market in China, BABA is a leading platform for global wholesale trade. Divided into three core businesses – Alibaba, Taobao, and Tmall, BABA has a number of affiliates making it even more profitable namely, its logistics affiliate Cainiao, and its financial affiliate Ant Group Inc., which is preparing to go public.
BABA’s revenue increased 34% year-over-year to $21.7 billion for the quarter that ended June 2020. Alibaba Cloud was the largest public cloud service provider in China for the quarter that ended March 31, 2020, and the cloud computing revenue gained 59% year-over-year to $1.7 billion for the quarter that ended June 2020. Moreover, BABA’s logistic arm Cainio partnered with Atlas Air Worldwide Holdings (AAWW), which is further expected to enhance its extensive logistics network.
Analysts expect BABA’s revenue to increase 55.5% for the quarter that ended September 2020 and 25.9% next year. The company’s EPS is expected to increase 15.7% for the quarter, 25.6% next year, and at a rate of 3.4% per annum over the next five years. BABA has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
Amid US-China political tension, BABA has been dominating headlines as its cloud-computing arm is expected to turn profitable by March 2021, Cainio is expected to have positive cash flows from operations over the same time, and Ant Group Inc is preparing to go public. The stock is expected to keep soaring despite already gaining over 41% year-to-date.
How does BABA stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
Facebook, Inc. (FB)
While there were some social networking companies even prior to FB’s appearance, FB truly took the world by storm, and is still going strong, enabling people to connect, share and discover. The company’s primary source of revenue is advertising, and it has also managed to make profits through its strategic acquisitions of Instagram, Whatsapp, and Oculus VR to name a few.
FB’s Daily Active Users (DAUs) increased 12% year-over-year to 1.8 billion for the second quarter and monthly Active users increased 12% year-over-year to 2.7 billion. Analysts expect FB’s revenue to increase 11.7% for the third quarter that ended September 2020, and 24.2% next year. The company’s EPS is expected to increase 25.2% this year, 26.6% next year, and at a rate of 20.3% per annum over the next five years. FB’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
FB had its share of negative publicity with some companies taking part in an advertising boycott of the company in July, and the House Judiciary subcommittee on antitrust issuing a report on October 6th demanding action to change antitrust laws. However, these issues have failed to curb investor’s enthusiasm for the company’s stock. The stock has gained 81.5% since hitting its 52-week low in mid-March.
FB’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and a “B” for Buy & Hold Grade and Industry Rank. Among the 58 stocks in the Internet industry, it’s ranked #10.
Netflix, Inc. (NFLX)
The world’s top provider of streaming movies and television, with 193 million paid subscribers in more than 190 countries, NFLX needs no introduction. An innovator in the media industry since its inception, NFLX provides subscription streaming entertainment service in various devices and offers TV series, documentaries, original content, and other content across the United States and internationally. Interestingly, the company still offers its domestic DVD-by-mail service, but no longer promotes it.
While many industries were severely disrupted by the pandemic, the demand for NFLX only grew. Average streaming paid memberships increased 25% year-over-year for the quarter that ended June 2020. The company added a record 10.1 million paid memberships for the quarter, versus 2.7 million a year ago. Unlike its competitors, NFLX’s business model relies solely on subscription revenue. The company’s revenue gained 25% year-over-year for the quarter.
Analysts expect NFLX’s revenue to increase 21.6% for the quarter that ended September 2020, and 17.5% next year. The company’s EPS is expected to increase 44.9% for the quarter, 42% next year, and at a rate of 32.5% per annum over the next five years. NFLX is expected to release its third quarter earnings on October 20th.
Despite getting involved in some controversies with shows like “Cuties,” and “Bad Boy Billionaires: India,” NFLX has managed to meet the pandemic-induced growing consumer demand for content. The stock has gained 67.5% year-to-date.
It’s no surprise that NFLX is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade and Buy & Hold Grade, and a “B” for Peer Grade and Industry Rank. In the 58-stock Internet industry, it is ranked #11.
Activision Blizzard, Inc (ATVI)
Best known for its franchises like Candy Crush, Call of Duty, and World of Warcraft, ATVI develops and publishes content and services online, on personal computers (PC), video game consoles, handheld, mobile, and tablet games worldwide. The company operates through three segments: Activision Publishing, Inc., Blizzard Entertainment, Inc., and King Digital Entertainment.
The gaming industry saw a demand boost owing to the pandemic and this is reflected in ATVI’s quarterly results for the quarter that ended June 30, 2020. Activision’s revenue gained 270% year-over-year with monthly Active users of 125 million, Blizzard’s revenue gained 20% year-over-year, driven by another strong quarter for World of Warcraft; and King’s revenue grew by 11% year-over-year with a high monthly active user base of 271 million.
Analysts expect ATVI’s revenue to increase 39.2% for the quarter that ended September 2020, and 2.7% next year. The company’s EPS is expected to increase 100% for the quarter, and at a rate of 24.4% per annum over the next five years. ATVI has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
The stock has gained 35.2% year-to-date. With increasing demand for video games as a result of people spending more time at home, and its expected release of the latest update of its popular World of Warcraft series later this year, the stock is well positioned to see further gains in the coming months.
ATVI’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with a “B” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. Within the Entertainment – Toys & Video Games industry, it’s ranked #1 out of 15 stocks.
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BABA shares were trading at $305.58 per share on Friday morning, up $6.12 (+2.04%). Year-to-date, BABA has gained 44.07%, versus a 9.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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