7 Top Robinhood Stocks: Do the Pros Agree?
The success of some Robinhood traders has piqued investors' curiosity. But what do the pros have to say about the platform's top stocks?
One of the many stock market phenomena of 2020 has been the rise of the Robinhood trader. The trading app, which has become extremely popular among millennials, boasts 13 million accounts, putting it on par with the likes of Schwab. And given a few stories of its traders making millions virtually overnight, some investors naturally have an interest in following the most popular Robinhood stocks.
It hasn't been all gravy, of course. For every eye-popping Robinhood success, there are many more normalized returns you don't hear about, not to mention deep losses.
And Robinhood, for all of its good in helping bring down trading costs across the board, hasn't been without its share of negative publicity. The app suffered several outages during the bear market, leaving traders unable to act in the midst of massive moves. And the recent suicide of a young trader from Illinois highlighted the dangers of providing access to sophisticated investment methods with little vetting, as well as seemingly "gamifying" investing.
Robinhood investors have nonetheless piqued the curiosity of the broader community. And it's easy to satisfy one's curiosity about their investing habits: Robinhood itself lists the app's most popular stocks at any given time, including how many accounts are invested in each.
Here are seven of the top Robinhood stocks and see whether Wall Street's pros see what these traders see. We ran seven of the app's top 10 names through TipRanks' database to monitor what the analyst community had to say about each.
Data and Robinhood popularity stats are as of July 9.
- Market value: $1.3 billion
- Popularity rank: #10
- Number of accounts holding: 451,293
- TipRanks consensus price target: $12.68 (8% upside potential)
- TipRanks consensus rating: Hold
To say that cannabis company Aurora Cannabis (ACB, $11.17) has had a rough go is an understatement. Weak revenues and negative profitability have sent investors running for the hills, and ACB shares have lost more than half their value this year.
But the situation might be improving.
On June 23, ACB announced it had reached its goal for selling, general and administrative expenses (SG&A), and that it plans on closing five facilities over the next two quarters to focus on production at its larger Sky, River, Polaris and Pemberton sites. Aurora also will boost production at its facility in Denmark.
"The fact Aurora has hit its SG&A run-rate target has to be seen as a positive for profit development into the next few quarters and its target of +ve EBITDA in 1Q," writes Jefferies analyst Owen Bennett. "Likely gross margin support from the facility closures is also a positive."
But Bennett, who has an Underperform rating and $14 price target, is nonetheless bearish.
"Gross margin support will likely be majority depreciation-based, which has no impact on cash flow," he writes. "(And) even if we reach an EBITDA breakeven point, the debt situation is far from solved, and with interest payments representing a high hurdle to reaching cash flow +ve, there will almost certainly be further dilution down the road to retire this, something we don't think is fully appreciated by the market today."
The rest of the analyst community is at least more bullish than Bennett, but it's hardly as enthusiastic as Robinhood investors. Of the 14 other analysts that have weighed in during the past quarter, just three are Buys; the remaining 11 rate ACB stock at Hold. For more information, check out the ACB analyst consensus and price target page on TipRanks.
- Market value: $1.63 trillion
- Popularity rank: #7
- Number of accounts holding: 519,958
- TipRanks consensus price target: $214.17 (flat potential)
- TipRanks consensus rating: Strong Buy
Bill Gates' brain child Microsoft (MSFT, $214.32) is No. 7 among the top Robinhood stocks. With products ranging from consumer electronics, software, personal computers and cloud computing offerings, Microsoft is one of the most dominant stocks in tech, and one of the few companies to exceed a trillion-dollar market value.
Here, the pros agree with the younger crowd. Of 23 analysts that have written notes on MSFT stock over the past three months, 21 call the stock a Buy, versus one Hold and one Buy.
Recently, Microsoft announced it would be closing all of its physical Microsoft store locations as part of a major change to its retail strategy. However, Wedbush's Daniel Ives is among those who think it's a smart move.
"This is a tough, but smart strategic decision for (CEO Satya) Nadella & Co. to make at this point," writes Ives, who has an Outperform rating and $220 price target on MSFT shares. "The physical stores generated negligible retail revenue for MSFT and ultimately everything was moving more and more towards the digital channels over the last few years.
"That said, in this COVID-19 environment this was the right time for Redmond to rip the band-aid off and close the stores strategically speaking."
For more analyst insights on MSFT, take advantage of TipRanks.
- Market value: $1.66 trillion
- Popularity rank: #6
- Number of accounts holding: 521,467
- TipRanks consensus price target: $355.52 (7% downside potential)
- TipRanks consensus rating: Strong Buy
Apple (AAPL, $382.73), the only company larger than Microsoft, is similarly both one of Robinhood's top stocks and a Wall Street darling.
At the moment, Apple is garnering positive attention thanks to updates announced during its annual Worldwide Developers Conference.
Oppenheimer's Andrew Uerkwitz tells clients that he is most excited about the App Clips feature on iOS 14, which will allow for light and fast user access to mobile app functions without needing to download the apps or create separate user profiles.
"With integrated Apple Pay, the feature will enable more seamless and accessible digital and physical experience," he writes. "The feature resembles WeChat Mini Programs (introduced in early 2017), which have created an ecosystem on top of Android/iOS in China."
Other upgrades caught Uerkwitz's eye, too. Apple Watch got a revamp, with watchOS 7 now supporting sleep tracking, and Watch Faces and Complications able to be shared. Also noteworthy is that Apple will now use its own processors, instead of Intel's (INTC), in Mac products.
"The historic move validates our view that Apple is creating a wide moat for its own ecosystem by deeper integration of hardware and software, and broader integration across all of its hardware devices," writes Uerkwitz, who rates the stock at Outperform, albeit with a $320 price target that suggests losses from here.
The rest of the Street is in the same place. AAPL stock has received 27 Buys versus just six Holds and one Sell over the past three months. However, Apple's rapid rise has put the stock past the consensus price target. So watch to see what comes next: price-target upgrades, or ratings downgrades on valuation. Discover what the rest of the Street has to say about Apple.
Delta Air Lines
- Market value: $16.4 billion
- Popularity rank: #5
- Number of accounts holding: 589,243
- TipRanks consensus price target: $38.00 (48% upside potential)
- TipRanks consensus rating: Strong Buy
While the airline industry has been crippled by the coronavirus outbreak, Delta Air Lines (DAL, $25.65) – off 56% year-to-date – has actually received a fair amount of praise from the analyst community.
Deutsche Bank's Michael Linenberg tells investors that DAL ended the most recent quarter with roughly $14 billion in liquidity, which he believes is the highest of the airlines in his coverage universe. Delta also has until Sept. 30 to decide whether to add $4.6 billion to its cash position via the CARES Act loan program.
Meanwhile, the company trimmed its daily cash burn rate from $100 million at the end of March to $40 million at the end of June, with the potential for breakeven cash flow by year's end.
"The fact that the company is on track to reduce its June Q 2020 operating costs by more than 50% is a remarkable feat, but also reinforces the company's built-in flexibility and higher proportion of variable costs than most of its competitors (we estimate that 60% of Delta's near to medium-term cost structure is variable vs. most other major airlines which we estimate are in the 40% - 50% range)," writes Linenberg, whose $47 price target implies more than 80% upside from current levels.
Delta is among the top stocks on Robinhood by virtue of its place in nearly 600,000 accounts, and we've previously highlighted Delta's higher standing among airline stocks to buy for when the industry does recover. The pros like DAL stock too, issuing nine Buys versus three Holds for a Strong Buy analyst consensus. You can learn more about the analyst community's views on Delta shares via TipRanks' consensus breakdown.
- Market value: $211.0 billion
- Popularity rank: #4
- Number of accounts holding: 629,325
- TipRanks consensus price target: $122.18 (5% upside potential)
- TipRanks consensus rating: Moderate Buy
2020 has been anything but fun and games for Walt Disney (DIS, $116.81). The House of Mouse has faced headwinds in almost every direction because of the pandemic, including having to close their parks. That has led to cautiously optimistic sentiment on the entertainment giant.
"Disneyland's reopening has been delayed from July 17 and Park employees have petitioned to push off DIS's Orlando Parks re-opening past July 11," writes Needham analyst Laura Martin. "Uncertainty about any resumption of studio production and movie release dates are ongoing, including Mulan (now set to open in theaters on July 24)."
"Our HOLD rating on DIS is based on our belief that consensus estimates are too high for DIS owing to COVID-19 disruption of many of its consumer-facing businesses, including theme parks, ESPN and film releases," Martin writes, though she does think Disney has a few things going for it. "We like DIS's OTT execution, and we believe DIS will be a winner of the 'streaming wars.'"
Based on all of the above, Martin has a Hold rating on the stock, although she doesn't provide a specific price target.
"(Walt Disney World) is set to re-open mid-July and while earlier than anticipated openings boost our revenue estimates, EBIT assumptions are largely unchanged due to limitations on parks attendance required by social distancing," adds UBS (Neutral, $126 price target).
Their colleagues are a little more optimistic, though not moreso than Robinhood traders, who have it among their top five stocks. Of 22 recent analyst reviews, 11 rate DIS a Hold and two say it's a Sell, but it does have nine Buy calls. This adds up to a Moderate Buy consensus rating. See other DIS analyst ratings on TipRanks.
- Market value: $5.7 billion
- Popularity rank: #3
- Number of accounts holding: 659,567
- TipRanks consensus price target: $12.88 (15% upside potential)
- TipRanks consensus rating: Moderate Sell
American Airlines (AAL, $11.18) faces the very same headwinds that Delta does. But while it's among the top Robinhood stocks, the analyst community isn't encouraged by what they see.
Wolfe Research analyst Hunter Keay points out that AAL is taking advantage of a recent surge in stock prices by issuing $750 million of converts, $750 million of equity and $2 billion of debt, with $1 billion of that expected to refinance a March term loan.
However, "This new capital does not change our fundamental view," Keay writes. "AAL is in a deep P&L hole out of which the prospects of recovery are hard to see, but the company (like all airlines) continues to enjoy seemingly limitless access to new cash. For all the recent optimism some airlines have been suggesting, the tempo of expensive cash raising activity obviously suggests it is underscored by real fears."
Keay estimates a $10.8 billion pretax loss this year, and "$7.7 billion in 2021-23," because of weak pricing and high fixed costs.
"We believe AAL is taking a more aggressive approach to adding back capacity partly because of a volume-oriented revenue strategy that pre-existed Covid19 and a heavy debt burden that requires more revenue to cover," writes Keay, who has an Underperform rating and $5 price target on AAL stock. "We see no good way to value AAL's equity even with a 3-4 year outlook."
American has managed to earn three Buy calls over the past three months, but against three Holds and seven Sells, adding up to a Moderate Sell consensus rating. If you'd like to see more analyst opinions about AAL, check out its analyst page on TipRanks.
- Market value: $23.2 billion
- Popularity rank: #1
- Number of accounts holding: 926,345
- TipRanks consensus price target: $6.24 (7% upside potential)
- TipRanks consensus rating: Hold
Ford (F, $5.84), at least for the moment, is the top Robinhood stock. They're banking on a turnaround in a company that has been put through the ringer in recent years, and that was forced to cut its dividend amid the COVID-19 crisis.
In an April note titled "Survived but bruised," RBC analyst points out that Ford recently raised $8 billion of debt at around 9%. While it was necessary, he writes that "investors may have been thinking this debt would help fund more and/or accelerate restructuring, justifying the cost. But despite Ford indicating a 'don't let a good crisis go to waste' mantra, only guided $0.7-$1.2 billion in redesign cash this year,"
Even if the situation improves, Spak isn't optimistic. "At some point maybe ~$15 billion revolver gets repaid ($20 billion cash, $30 billion liquidity target), but otherwise, recent debt raise seems to be a mid-term permanent part of cap structure, eating away at cash flow and taking away from equity value," writes Spak, who has a Sector Perform rating (equivalent of Hold) and $5 price target.
JPMorgan's Ryan Brinkman is similarly on the fence, but he raised his price target from $6 per share to $7 in June, citing mounting evidence of a recovery in new-vehicle sales and used-vehicle pricing.
They sit in the majority. The pros have six Holds on Ford stock, versus three Buys and two Sells over the past three months. Check out other analyst ratings and targets on TipRanks.
Maya Sasson is a content writer at TipRanks, a comprehensive investing platform that tracks more than 5,000 Wall Street analysts as well as hedge funds and insiders. You can find more of their stock insights here.