When the calendar is finally turned on 2020 in a matter of days, it'll end one of the craziest years in stock market history. The benchmark S&P 500 lost over a third of its value in mere weeks during the first quarter and has spent the past nine months in all-out rally mode. Though this volatility can be unnerving for some, Robinhood investors have loved every minute of it.
Online investing app Robinhood, which is well known for its commission-free trading platform and for offering free shares of stock to new users, has done a particularly good job of attracting young investors. Millions of people have joined the trading platform in 2020, with the average age of Robinhood's user base only 31.
On one hand, it's great to see young investors leveraging their time and putting their money to work in the world's greatest wealth creator. On the other hand, these millennial investors often lack the tools and understanding needed to invest successfully. This is why Robinhood's leaderboard (the 100 most-held stocks on the platform) is often filled with less-than-desirable companies.
Yet, in 2020, Robinhood investors hit on (or chased) three big winners. If you had the foresight to invest $100,000 in any of these Robinhood stocks at the beginning of 2020, you'd have well over $1 million in your account today.
NIO: $1.14 million (+1,039%)
China-based, electric-vehicle (EV) manufacturer NIO (NIO 1.46%) is one such company that's engineered quadruple-digit returns for its shareholders in 2020. The ninth most-held stock on the Robinhood platform would have turned a $100,000 investment into $1.14 million as of this past weekend.
The reason investors keep "stomping on the gas pedal" is NIO's opportunity in the largest EV market in the world. Within 15 years, roughly half of all auto sales in China are expected to be EVs or hybrids. The EV market is nascent in China, meaning market share is up for grabs.
Investors have also cheered the operational and balance-sheet progress NIO made in 2020. Well over 22,000 premium EV SUVs have been delivered between April 1 and Sept. 30, which is more than the company delivered in all of 2019. Upping its capacity has sent sales considerably higher, and it's flipped the company's vehicle margin from negative to a double-digit positive percentage. NIO also recently introduced its EC6 crossover, which will complement its two top-selling SUVs.
As for its balance sheet, NIO took advantage of its skyrocketing share price to sell stock, including a roughly $3 billion offering just a few weeks ago. In 2019, NIO had to abandon its capacity-expansion plans due to a lack of capital. Moving forward, cash should no longer be a constraint.
The big question entering 2021 is whether NIO can deliver on investors' lofty expectations by taking a leap forward on the capacity front. The company's current annual run-rate is only about 50,000 to 60,000 EVs. Growth investors will want to see this number grow considerably by the end of 2021.
Vaxart: $1.93 million (+1,834%)
The top-performing Robinhood stock in 2020 is small-cap, clinical-stage drug developer Vaxart (VXRT 0.53%). The company, which sneaks in as the 99th most-held stock by Robinhood investors, would have turned $100,000 into almost $2 million through the holiday-lengthened weekend.
As you might have rightly guessed, the buzz surrounding Vaxart has to do with the development of a treatment to prevent COVID-19, the disease caused by the coronavirus (SARS-CoV-2). Although we've witnessed two vaccines already gain emergency use authorization (EUA) from the U.S. Food and Drug Administration, Vaxart's candidate, VXA-CoV2-1, is unique in two ways:
- VXA-CoV2-1 is an oral tablet, making it the first oral solution to reach human clinical trials. For those folks skeptical of needles, it could be a game-changer.
- Preclinical data in hamsters indicates that VXA-CoV2-1 induced a systemic and mucosal immunity. This implies even greater protection than the systemic immunity provided by the EUA-approved vaccines.
Vaxart has begun phase 1 clinical studies with its leading COVID-19 candidate, and it's worked out a number of manufacturing agreements for VXA-CoV2-1.
However, Vaxart also has a gray cloud overhanging its operations. The Securities and Exchange Commission (SEC) opened an investigation in October over allegations that the company had misstated its involvement in Operation Warp Speed.
In the meantime, investors are anxiously awaiting updated clinical data on VXA-CoV2-1.
Plug Power: $1.13 million (+1,026%)
A final Robinhood stock that could have made you a millionaire in 2020 is hydrogen fuel-cell solutions-provider Plug Power (PLUG 0.40%). Had you invested $100,000 into the 16th most-held stock on Robinhood at the beginning of the year, you'd have more than $1.1 million. Not too shabby!
A growing climate consciousness is one reason Plug Power has soared over the past 12 months. With corporate America looking for ways to minimize its carbon footprint, Plug's hydrogen fuel-cell-powered mobility and stationary solutions have become a popular choice. According to the company's third-quarter operating results, the 600 million hours of runtime in 2020 by its GenDrive systems have removed 6.7 million pounds of carbon dioxide.
Similar to what happened with Vaxart, the coronavirus pandemic was also a major catalyst in 2020 for Plug Power. The company's hydrogen fuel-cell solutions are most notably employed in forklifts used in warehouses and grocery stores. Since a considerable number of consumers have been staying in their homes to avoid contagion, demand for online orders and for grocery store items has risen significantly.
It also can't be overlooked how Plug Power's prudent dangling-carrot approach from 2017 is driving its success today. In 2017, Plug Power doled out warrants to two cornerstone customers, one of which is Amazon. These warrants are based on the number of orders Amazon places with Plug Power. Given the rapid appreciation of its share price in 2020, it's pretty much a no-brainer that Amazon will eventually exercise the full $600 million in orders for fuel-cell technology.
Plug Power's management team believes $1.4 billion in sales is possible by 2024. That would be up from Wall Street's estimate of $324 million in 2020. With growth like this, Plug Power remains a pricey but intriguing growth stock to keep an eye on.