Because the roll-out of COVID-19 vaccines has begun, hope for an economic recovery this year is in the air. However, the U.S. is still seeing the highest death toll globally, according to data aggregated by Johns Hopkins University. And Europe recently announced tighter and longer coronavirus lockdowns to control the spread of a new, more contagious, variant of the virus.
Amid the pandemic, the Robinhood app, which is known for its commission-free trades, saw an influx of investors, particularly millennials. For a stock to be listed on the Robinhood 100 list it must generate some buzz. So, not all stocks on the list are fundamentally sound.
Visa Inc. (V), Johnson & Johnson (JNJ), Walt Disney Company (DIS), and Uber Technologies, Inc. (UBER) are currently on the Robinhood 100 list, but not solely because of market hype. We think these stocks are strategically positioned to soar in the upcoming months based on their fundamental strength and market dominance. So, it could be wise to own these stocks this year.
Visa Inc. (V)
Founded in 1958, V operates as a payment’s technology company worldwide. It connects consumers, merchants, financial institutions, businesses, strategic partners, and government entities to electronic payments. The company provides its services under the Visa, Visa Electron, Interlink, VPAY, and PLUS brands. V is on the Robinhood 100 list and has 84% of analyst ratings it as a ‘Buy.’
The company’s revenue increased 5.5% sequentially to $5.1 billion for the quarter ended September 30, 2020. While data processing revenues increased 4% year-over-year to $2.9 billion, other revenues increased 5% year-over-year to $361 million. Its operating income increased 4.8% sequentially to $3.14 billion, and its EPS increased 4.7% sequentially to $1.12.
Analysts expect V’s revenue to increase 6.4% this year, and 17.2% next year. The company’s EPS is expected to increase 8.1% in 2021, 25.5% in 2022, and at a rate of 12% per annum over the next five years. V has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters.
On January 11, the company announced the appointment of General Counsel Kelly Mahon Tullier to the newly created position of Executive Vice President, Chief Legal and Administrative Officer. V announced a strategic partnership on November 23, to launch Visa Commercial Pay, a suite of B2B payment solutions to help improve cash flow for businesses and eliminate outdated manual processes. Also in November, V announced the completion of its acquisition of YellowPepper. The stock has rallied 15.6% over the past nine months to close yesterday’s trading session at $201.86.
How does V stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #15 of 47 stocks in the Consumer Financial Services industry.
Johnson & Johnson (JNJ)
Founded in 1885, JNJ is one of the world’s largest healthcare companies. The company operates through three segments — Consumer, Pharmaceutical and Medical Devices. Its consumer segment includes a range of products used in the baby care, women’s health, and wound care markets, among others. Its pharmaceutical segment is focused on five therapeutic areas, while its Medical Devices segment includes a range of products used in the orthopedic, surgery, cardiovascular, diabetes care and vision care fields. JNJ is on the Robinhood 100 list and has 67% of analyst ratings it as a ‘Buy.’
For the third quarter ended September 30, 2020, the company’s sales increased 15% sequentially to $21.08 billion. The pharmaceutical segment, which accounted for 54.2% of the net sales, increased 5% year-over-year to $11.42 billion. Consumer health segment sales increased 1.3% year-over-year to $3.51 billion and non-GAAP net earnings increased 3.5% year-over-year to $5.87 billion, yielding EPS of $2.20, which increased 3.8% year-over-year.
Analysts expect JNJ’s revenue to increase 4.6% for the quarter ending March 31, 2021, and 8.7% in 2021. The company’s EPS is expected to increase 12.2% in 2021, and at a rate of 4.3% per annum over the next five years. JNJ has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters. The stock has gained 9.6% over the past year and is currently trading just 0.8% below its 52-week high of $161.95.
The company announced a cash dividend $1.01 per share on the company’s common stock on January 4 for the first quarter of 2021. On December 21, 2020, JNJ’s Janssen Pharmaceutical Companies announced the initiation of a rolling submission of its Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for ciltacabtagene autoleucel (cilta-cel), for the treatment of adults with relapsed and/or refractory multiple myeloma. On the same date, Janssen Pharmaceutical announced the authorization of REKAMBYS in combination with ViiV Healthcare’s VOCABRIA in the European Union for the treatment of HIV-1 infection in adults.
JNJ’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and a “B” for Industry Rank. Among the 239 stocks in the Medical – Pharmaceuticals industry, it is ranked #1.
Walt Disney Company (DIS)
Based in Burbank, California, DIS is a global entertainment company. It operates through four business segments — Media Networks, Parks Experiences and Products, Studio Entertainment, and Direct-To-Consumer and International. While the company’s Parks, Experiences and Products segment received a temporary setback amid the pandemic, DIS has been making good progress in the subscription video market with the help of Disney+, Hulu, and ESPN+. DIS is on the Robinhood 100 list and has 74% of analyst ratings it a ‘Buy.’
The company’s total revenues climbed 24.9% sequentially to $14.7 billion for the quarter ended September 30, 2020. Revenues from the media network segment increased 10.8% year-over-year to $7.2 billion, while revenues from direct-to-consumer & international segment increased 40.8% year-over-year to $4.9 billion. Disney+ reported more than 73 million paid subscribers, which surpassed DIS’ expectations. The total number of paid subscribers for Hulu increased 28.4% year-over-year to 36.6 million.
Analysts expect DIS’ revenue to increase 6.8% in 2021, and 23.5% in 2022. The company’s EPS is expected to increase 183.9% in 2022 and at a rate of 41.6% per annum over the next five years. DIS’ earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
In mid-December, DIS announced a new set of environmental goals for 2030 focused on five main areas — Greenhouse Gas Emissions, Water, Waste, Materials and Sustainable Design. During an Investor Day Presentation held on December 10 the company announced that, as of December 2, 2020, its portfolio of direct-to-consumer services had exceeded a total of 137 million global paid subscriptions, including 11.5 million ESPN+ subscribers, 38.8 million Hulu subscribers, and 86.8 million Disney+ subscribers.
On October 26th, 2020 DIS announced that Disneyland Paris had embarked on one of the largest solar canopy energy projects in Europe, which is expected to be completed by 2023. Over the past six months, the stock has gained 46.2% to close yesterday’s trading session at $173.43.
It is no surprise that DIS is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 16- stock Entertainment – Sports & Theme Parks industry, it is ranked #1.
Uber Technologies, Inc. (UBER)
Famous for its ride-hailing services, UBER develops and operates technology applications that support a variety of offerings on its platform. Its operating segments include Rides, Eats, Freight, Other Bets, and Advanced Technologies Group (ATG) and Other Technology Programs. The company aims to become a fully electric, zero-emission platform by 2040, with 100% of rides taking place in zero-emission vehicles, on public transit, or with micro mobility. UBER is on the Robinhood 100 with 81% of analysts ratings it a ‘Buy.’
While the company’s ride-hailing services received a setback amid the coronavirus pandemic, its food delivery service, UberEats, and goods delivery service, UberFreight, have become very popular since the onset of the pandemic. Its non-GAAP delivery revenue increased 189.5% year-over-year to $1.1 billion for the third quarter ended September 30, 2020. Freight revenue increased 32.1% year-over-year to $288 million. Uber Pass + Eats Pass subscribers exceeded 1 million paid subscribers. But the company’s loss per share of $0.62 surpassed the consensus estimate by 4.6%.
Analysts expect UBER’s revenue to increase 9.5% for the quarter ending March 31, 2021, and 42.2% in 2021. Its s EPS is expected to increase 14.1% for the fourth quarter ended December 31, 2020, 59.2% in 2021, and at a rate of 65.5% per annum over the next five years. The stock has gained more than 284% since hitting its 52-week low of $13.71. It closed yesterday’s trading session at $56.91.
On January 12, UBER announced more of its plans to tackle climate change. UBER expanded Uber Green to more than 1,400 new North American cities and towns. In concert with other companies, UBER joined the Zero Emissions Transportation Association (ZETA), a new organization that will advocate for national policies that will enable 100% electric vehicle (EV) sales by 2030. The company rolled out Uber Connect on December 9 to more than 2400 new United States cities and towns.
UBER’s strong fundamentals are reflected in its POWR Ratings, it has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, and Peer Grade.
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V shares were trading at $201.96 per share on Friday afternoon, up $0.10 (+0.05%). Year-to-date, V has declined -7.67%, versus a 0.85% 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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