Stock Market

The Robinhood (NASDAQ:HOOD) platform is certainly an interesting one for those looking to invest in the stock market. It certainly burst onto the scene early in the pandemic with commission free trading. That feature made it very attractive to retail investors, leading to impressive growth for Robinhood stocks.

The Robinhood platform has been around for quite some time despite its more recent rise in notoriety. Back in 2014, the platform boasted a more modest 500k users. Fast forward to 2021, and that number has risen to 22.5 million.

Additionally, it has been a key player in the GameStop (NYSE:GME) saga. It undoubtedly helped fuel the video game company’s rise to prominence. But at the same time, Robinhood grew lots of ire from its “young and poor” user base when it halted GME stock trading in January.

There’s a lot more to be said about the Robinhood platform of course, but we’re here to discuss Robinhood stocks. And although the platform remains controversial, investors should utilize as they would any other trading platform.

Because even though Robinhood is associated with meme stocks and other high-risk investments, at its heart, it’s simply a platform. Investors can make sound choices on it as with any other trading platform. And that’s what all of the stocks below have in common: They’re available for trade on Robinhood, and they’re sound choices.

  • Chevron (NYSE:CVX
  • Exxon Mobil (NYSE:XOM)
  • Coinbase (NASDAQ:COIN
  • Alibaba (NYSE:BABA)
  • Ford (NYSE:F)
  • Microsoft (NASDAQ:MSFT)
  • Apple (NASDAQ:AAPL)

Now, let’s dive in and take a closer look at each one.

Robinhood Stocks: Chevron (CVX)

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It’s hardly a secret why Chevron is in position to blow up moving forward: Oil prices have recently surged. Prices recently hit a three-year high of $86 per barrel. That has national average prices at the pump sitting at nearly $3.39, up a bit from $3.19 a month earlier.

Per barrel prices did slow recently as the forecast of a warm U.S. winter temporarily checked demand. Still, other reports insist that oil prices could explode as the largest storage hub in the U.S. nears empty.

Further, Chevron and the other oil stock on this list, Exxon Mobil, have both lagged behind their oil exploration and production peers as rebound plays this year. That sounds negative at first blush, but Morgan Stanley energy analyst Devin McDermott sees it differently.

In a recent client note he wrote that both firms now have projected cash flow yields of 12%. That’s a decade high for both firms, and nearly 2.5X their five-year averages of 5%.

Those rising cash flow yield levels aren’t uniform across the E&P sector, leading McDermott to conclude that Chevron should become increasingly attractive.

Outside of that immediate tailwind, CVX stock remains attractive for traditional reasons. Its $1.34 quarterly dividend equates to an annual 4.71% yield.

Exxon Mobil (XOM)

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Let’s assume Exxon Mobil does become increasingly attractive as Morgan Stanley’s Devin McDermott expects. What might that mean? XOM stock now trades at $63. Let’s assume demand rises on oil price tailwinds and those rising cash flow yields mentioned above.

Let’s also assume that Exxon Mobil rises above its average target stock price of $68.60, and hits $70 sometime in 2022. That seems entirely plausible given that XOM stock traded at that level just prior to the pandemic onset.

What kind of returns would that lead to once Exxon Mobil’s dividend gets factored in? Let’s assume XOM’s 87 cent dividend holds throughout all of 2022. An investor who bought and held it for all of 2022 would then have an asset worth $73.48 ($70 stock share + $3.48 in dividend payments). That would equate to 16.63% return if all of my assumptions hold true. And in the steady world of oil stocks, that could certainly be considered “blowing up.”

Moreover, Exxon Mobil isn’t banking on a return to peak oil alone to shore up its prices in any case.

The firm plans to increase its investment into technology including carbon capture. In that vein, it has recently invested $400 million into carbon capture and storage at its LaBarge, Wyoming facility.

Robinhood Stocks: Coinbase (COIN)

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Switching gears entirely, let’s look at cryptocurrency exchange Coinbase, and its stock. My colleague, Stavros Giorgiadis, succinctly summarized the knocks against COIN stock in a recent article:Coinbase is facing a mix of negative factors right now. The regulation of the crypto market with a recent crackdown in China is a big contributor. Additionally, a Securities and Exchange Commission (SEC) decision made Coinbase abandon a lending program, and a recent broader economic crisis in China didn’t help COIN stock.”

He also rightly points out the bull thesis for Coinbase which is predicated on strong growth and profitability. This is of course why I believe COIN stock could blow up next year. First of all, China changes very quickly. Throughout 2021, we’ve seen how quickly its tight centralized control can turn on a dime. Right now, its regulations are a drag on Coinbase, but those factors could become favorable as quickly as they soured.

In the second quarter, Coinbase reported $2 billion in revenues and $1.6 billion in net income. Monthly transacting users increased 44% between Q1 and Q2 hitting 8.8 million total. The recent surge in Bitcoin prices is likely to improve Q3 earnings which will be reported on Nov. 9.

Furthermore, analyst consensus is that COIN stock is worth much more than it currently trades at. Thus, 2022 should be a strong year for the firm.

Alibaba (BABA)

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Why shouldn’t investors consider BABA stock right now? Of course, there’s the ongoing crackdown in China on all things that its centralized government deems incongruous with party agenda.

In the case of Alibaba, that meant control of vast amounts of data that Beijing wants in its hands, and not Alibaba’s. All of that was preceded by Jack Ma and Ant Group lashing out at the government directly. That didn’t end well for Ma, Ant Group, or Alibaba, which ultimately faced a $2.8 billion fine from the government.

The fine was levied for Alibaba’s anti-monopolistic practices as they related to rival platforms.

But that’s mostly behind Alibaba now. It agreed to pledge $15.5 billion to Beijing’s “Common Prosperity” initiative. That payment will be divided up and paid through 2025 and directed toward innovation, development, job creation, and social causes.

It is what it is, but it also puts Alibaba back on the right side of the power dynamic in China. Few believe BABA stock is anything other than a buy on its fundamentals. The reason it trades at $177, even after a recent upward surge, is broad Chinese headwinds. China won’t choke its homegrown champions forever, especially now that they’ve been cowed.

Robinhood Stocks: Ford (F)

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Ford is quickly becoming synonymous with the non-fossil fuel side of automotive stocks. Tesla (NASDAQ:TSLA) remains the bellwether for the broader electric vehicle (EV) sector. So, when it rises, so too does the rest of the EV stock sector.

Until recently that wouldn’t have affected Ford much. But perceptions are changing given that Ford recently announced an $11.4 billion investment into EV battery manufacturing. The deal, completed in conjunction with South Korea’s SK Innovation, will bring 11,000 jobs to Tennessee and Kentucky.

So, when Tesla recently reported strong earnings Ford’s stock price received a bump along with EV names like Nio (NYSE:NIO).

Traditional car manufacturers are interested in the greater profit margins that EVs offer compared to internal combustion vehicles. Ford has managed to impress upon the market that it will soon be able to carve profits from the EV sector as well. That has its price rising which should continue past 2022.

Microsoft (MSFT)

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The last two entrants on this list have two factors in common which should make them worth your time: They’re both tech stocks, meaning they have growth potential, but they both pay a dividend.

Microsoft is associated with a lot of things: Bill Gates, love him or hate him, the Cloud, Windows, Xbox and its Surface computers among other things. Somewhere way down that list you might find mention of its dividend.

But I think that’ll change moving forward. And I think both Microsoft and Apple are clearly moving toward a future where dividends feature more heavily.

In Microsoft’s case the signals are evident in its Sept. 14 dividend increase. On the one hand, Microsoft’s dividend yields 0.80%. That’s very low, and dividend investors could look just about anywhere else and find higher yields.

However, that’d be missing the bigger picture. Microsoft increased its dividend 6 cents on Sept. 14. That equates to an 11% increase on a quarterly sequential basis. Perhaps increasing dividends and blowing up don’t seem congruous. However, I think it makes Microsoft much more attractive and signifies a future direction many may not associate with Microsoft.

Robinhood Stocks: Apple (AAPL)

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I’ll start my recommendation of Apple by continuing the conversation about dividends. The tech giant, like Microsoft, pays a miniscule dividend yielding 0.59%. 

But that dividend is almost certain to rise moving forward. Back in February the firm committed to yearly dividend increases. And the company hasn’t reduced its dividend since 2012.

That’s one reason to consider Apple even as it endures a recent slump. The company is being hit by the chip shortage and may have to produce as many as 10 million fewer of its iPhone 13s.

But don’t think that’ll affect Apple for long. Consumer demand for Apple products will weather the supply chain issue with near certainty. Therefore, I’d consider jumping in now.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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