The Robinhood 100, a list of the most owned stocks on the Robinhood platform, is an excellent representation of millennial investor tastes. While many millennial investors have focused on just the big name tech stocks on the list, I believe their focus should instead be on the stocks with the highest upside potential, and I’m highlighting three of them on the Robinhood 100 today. 

There are a couple of ways to look at upside potential. One is to compare a stock’s price to its fair value. Many online research sites calculate a stock’s fair value using discounted cash flow analysis. The problem, though, is that each site may use different inputs in their models. This can lead to fair values on each website. Another way to determine upside potential is by comparing a stock’s price to an average of analyst’s price targets. That’s the way I prefer to do it.

But, before I looked at upside potential, I ran the Robinhood 100 list through our proprietary POWR Ratings system to find stocks that have a “Strong Buy” or “Buy” rating. This resulted in 32 stocks, and of that list, the following three stocks had the highest upside potential based on analyst price targets: General Motors Company (GM), Johnson & Johnson (JNJ), and Activision Blizzard Inc. (ATVI).

General Motors Company (GM) 

GM has traditionally been known as one of the three big automakers in the U.S. Still, the company’s entry into the electric vehicle (EV) market has the potential to change the game. The company has the backing of both presidential candidates who support “Made in America,” and its proprietary batteries and motors will give the company an edge in the EV race. Plus, it’s the only EV automaker that is currently generating profits.

GM’s first next-gen vehicle, the Hummer EV, sold out its first-year model in an hour. Its Cadillac crossover, the Lyriq, is expected to debut soon. GM subsidiary Cruise recently got permission from California to operate its self-driving test vehicles without safety drivers. The company expects to have 22 new electric cars by 2022, with some getting 400 miles between charges, with its new Ultium battery.

Last month, the company announced that its Chinese sales rose 12% for the quarter ending in September, compared to the same quarter a year ago. This was the first year-over-year gain for sales in China in two years. GM is expected to announce its full results tomorrow.

According to Tipranks, GM has a consensus analyst rating of “Strong Buy,” with a price target of $42.69, which would indicate an upside of over 20%. That’s quite the upside for a company about to become a significant player in the red-hot electric vehicle industry. The stock is also rated a “Buy” in our POWR Ratings system with a grade of “A” in Trade Grade and Peer Grade and a “B” in Buy & Hold Grade. It is also the #3 ranked stock in the Auto & Vehicle Manufacturers industry.

Johnson & Johnson (JNJ)

Similar to GM, JNJ is an older and very well-known company with a global reach. It has an iconic line of brands, including Tylenol, Neutrogena, Benadryl, and a lucrative pharmaceutical division that drives substantial revenue. Its long-term growth prospects look positive as key drugs such as Stelara, Imbruvica, and Darzalex drive robust growth.

The company also has a robust drug pipeline with 14 new drugs expected to launch by the end of 2023. JNJ is also working on a promising single dose COVID vaccine, which can be stored at least three months, a significant competitive advantage.

JNJ reported its latest financial results last month and beat estimates for sales and earnings. The company also raised its current-year outlook due to a faster-than-expected recovery in its Medical Devices unit. Management sees this trend to continue in the fourth quarter and next year. The company also has a generous 2.9% dividend.

The average analyst price target for JNJ is $169, which would indicate a 21% upside for the stock. If its COVID vaccine gets approved, we could see the stock reach that level. JNJ is rated a “Buy” in our POWR Ratings system. It has a grade of “A” for Peer Grade and a “B” for Buy & Hold Grade and Industry Rank. JNJ is also ranked #6 out of 240 stocks in the Medical – Pharmaceuticals industry.

Activision Blizzard, Inc. (ATVI)

As we know, most of the stocks that have performed well this year have benefited from the stay at home trends triggered by the coronavirus pandemic, and ATVI is no exception. The company, which is up 34% year to date, has seen a spike in demand and engagement due to gamers forced to stay at home. That should only increase as cases continue to surge and colder weather forces gamers inside.

ATVI is benefiting from three secular trends right now. The first is the two new game consoles from Sony (SNE), and Microsoft (MSFT) are expected to launch this quarter, which should drive revenues higher for ATVI. The second is the growth of the middle class in emerging market countries, and the third is the shift towards digital gaming distribution.

The company reported its latest financial results yesterday and outperformed both earnings and revenues. EPS grew 121.9% year over year, and revenues increased by 61.2%%. This was driven by robust performance in ATVI core games, including Call of Duty: Modern Warfare & Warzone, World of Warcraft, Hearthstone and Overwatch. Plus, Candy Crush Saga was once again the top-grossing franchise in U.S. mobile app stores.

The average analyst price target for ATVI is 97.86, which represents an enormous 23.75% upside. Even with a strong performance year to date, there is still a lot of room for the stock to run. ATVI is rated a “Buy” in our POWR Ratings system. It has an “A” for Trade Grade, and a “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. The stock is also ranked #2 in the Entertainment – Toys & Video Games industry.

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GM shares were trading at $35.24 per share on Wednesday afternoon, down $0.11 (-0.31%). Year-to-date, GM has declined -2.54%, versus a 8.27% rise in the benchmark S&P 500 index during the same period.

About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...

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