This has been a crazy year for the investment community. Although volatility is always present in the stock market, we've witnessed the steepest bear market decline in history during the first quarter, as well as the most ferocious rebound to new highs from a bear market low. You could rightly say that 2020 has tested investors' resolve like never before.
But it's been especially trying for millennial or novice investors who might not have navigated their way through a bear market before.
Online investing app Robinhood has gained millions of new members this year, with 31 being the average age of its users. Although the platforms' leaderboard (i.e., the list of its most held stocks) features a handful of well-known and time-tested companies, millennial and novice investors have also been drawn to their fair share of awful companies.
However, investing doesn't have to be complicated for Robinhood investors. They simply need to change up their game plan to think of their investments in terms of years, rather than days, weeks, or months. The following four stocks are great companies that Robinhood investors can confidently buy and hold for five years or longer.
What's an easy way to get young people excited about investing? Let them buy into a high-growth company that many can associate with: Pinterest (NYSE:PINS).
Social media up-and-comer Pinterest hasn't run into the same growth issues that have plagued other platforms not named Facebook. In the June-ended quarter, Pinterest saw its monthly active member count skyrocket by 116 million (39%) over the prior-year period to 416 million, with the vast majority of these users located outside the United States. The bad news is that average revenue per user outside the U.S. is substantially lower than ARPU inside the U.S. However, Pinterest more than doubled international ARPU last year, and overseas ARPU growth is a big reason it can deliver sustainable double-digit sales growth moving forward.
Pinterest is also a burgeoning e-commerce opportunity. You might think of Pinterest as a fun place to pin products, services, or places that interest you. Pinterest views these pinned boards as the perfect opportunity to connect motivated consumers with small businesses that specialize in their interests.
Look for Pinterest to be possibly the top-performing social media company this decade.
Robinhood's leaderboard shows that its members are drawn to companies researching a coronavirus vaccine. I'm not a huge fan of chasing what could be a crowded and unpredictable space. Rather, I'd suggest Robinhood investors buy into a proven, high-growth biotech stock like Exelixis (NASDAQ:EXEL).
Exelixis is a cancer drug developer that's primarily riding the coattails of Cabometyx to substantial growth. Cabometyx flopped in prostate cancer trials in 2014, but ultimately proved successful in meeting its primary endpoint in treating first- and second-line renal cell carcinoma and hepatocellular carcinoma. These indications should combine for well over $1 billion in peak annual sales.
But Exelixis isn't done there. With an abundance of cash flowing in from its operations each year, the company has reignited its internal research segment. It also has around six dozen ongoing clinical studies examining Cabometyx as a monotherapy or combination therapy. This includes the phase 3 study that saw Cabometyx and Bristol Myers Squibb's immunotherapy Opdivo run circles across previous standard-of-care Sutent in first-line RCC.
Exelixis is going to be piling on the cash for years to come, all while enjoying double-digit growth potential from Cabometyx.
Millennial investors are also fans of investing in marijuana stocks. While there are plenty of great U.S. pot stocks to choose from, Robinhood's members can't buy companies that trade over the counter. Thus, rather than focusing on the direct players, high-growth ancillary company GrowGeneration (NASDAQ:GRWG) looks like a smart buy-and-hold.
GrowGeneration currently has 28 stores open across 10 states, and is responsible for providing an assortment of hydroponic solutions, as well as lighting, soil, and nutrients to cultivators. With 34 states having given the green light to medical marijuana in the U.S., there's plenty of opportunity for cultivators to improve yield and lower production costs. GrowGen aims to have 50 retail locations open by the end of next year.
What's been impressive for GrowGeneration is just how many different ways it can expand its top line. We've witnessed steady organic growth from existing locations. The company has also made roughly a dozen acquisitions since 2014 to expand its product portfolio and reach. The company has also launched a private label program to improve repeat business and bolster its margins.
Everyone knows direct players in the pot industry are growing like weeds, but GrowGen has shown it can keep pace with multistate operators in the sales growth department.
There probably isn't a more consistent double-digit growth trend this decade than cybersecurity. With the novel coronavirus completely reshaping the traditional office environment, more employees than ever are working remotely. This means a growing emphasis on storing data in the cloud, as well as protecting that data.
The cybersecurity company that Robinhood investors should consider buying and holding for at least the next five years is Okta (NASDAQ:OKTA). This company offers a diverse portfolio of identity verification solutions that lean on artificial intelligence to become smarter over time. Okta's product portfolio is designed to grow with its clients -- who, as they expand, become more likely to add on new protections. Having existing clients spend more is Okta's plan for margin expansion.
Furthermore, the vast majority of Okta's revenue -- 95%, to be precise -- is derived from subscriptions. Subscription revenue tends to be high margin, and it reduces the chances of customer churn. In the July-ended quarter, Okta's gross margin came in at a healthy 74.5%, up 210 basis points from the prior-year period.
Okta isn't a cheap stock by any means, but it provides a basic-need service in today's growing digital economy. That suggests additional upside remains.