After a crazy 2020, investors are sitting down to figure out what their strategies will be for the coming year. Robinhood has become a go-to source for stocks as its mobile app has brought a huge number of young new investors into the stock-market fold.
I'm always interested to see what other investors are doing with their money. So when my fellow Fool Sean Williams revealed the 50 most popular stocks on Robinhood, I figured it was a good place to start a search for some promising companies.
Unfortunately, a lot of what I found there was disappointing:
- On one hand, Robinhood investors like speculative plays, especially when there are prospects for turnarounds. Beaten-down sectors, including airlines, cruise ship operators, and energy stocks, are disproportionately represented in the top 50. Companies like Boeing (BA 1.10%), movie chain AMC Entertainment (NYSE: AMC), and ride-hailing giant Uber Technologies (NYSE: UBER) also figured prominently.
- Yet there's also a lot of emphasis on well-known, big-name companies everyone's already familiar with. It's no secret that Tesla (NASDAQ: TSLA) has soared lately. It doesn't take much imagination to put your money into blue-chip giants like Apple (NASDAQ: AAPL), Disney (NYSE: DIS), and Starbucks (SBUX -0.12%).
Looking beyond those selections, however, I was able to find a few Robinhood stocks that look promising. They're speculative in their own way, but they also have long growth trajectories that could continue far into 2021 and beyond.
Fool co-founder David Gardner has said that you should invest in companies that are making the change you want to see in the world. My own corollary to that rule is more cynical: Invest in the change that's happening in the world even if you don't agree with it.
Snap (SNAP 1.27%) has all the ingredients to inspire my personal disdain. Social media has reached addictive proportions, and an entire generation of young users has flocked to Snap's Snapchat. Another mark against the company was CEO Evan Spiegel's $637 million stock bonus following a year of massive losses in 2017.
Yet there's no denying that Snap has maintained a steep growth trajectory since its initial public offering (IPO). Sales more than doubled between 2017 and 2019, and the COVID-19 pandemic pushed more users than ever onto Snapchat, further boosting its performance. Sure, Snap is still losing money, but it's doing a far better job of monetizing its growing user base than it has historically. The rise of social media is an unstoppable force, and Snap is putting itself in position to join its much-larger peers at the top of the industry.
2. Virgin Galactic
I've been interested in space ever since my older brother showed me Star Trek reruns in the late 1970s. That has me rooting all the way for Virgin Galactic (SPCE 8.38%) to turn its space tourism business into a reality.
At first glance, you might think there's nothing more speculative than Virgin Galactic. The company is still in its test-flight stage, and despite a long line of prospective ticket buyers, there's no guarantee that the company will ever get off the ground let alone find a sustainable audience for its $250,000 per-seat trips to low Earth orbit.
However, Virgin Galactic's best opportunities are in its potential for an alternative to transoceanic commercial airline service. If you've ever flown the 14-hour flight from Los Angeles to Sydney, you can imagine how much you'd be willing to pay to cut the time down to three or four hours. Virgin's working on a supersonic aircraft to do just that and cater to a much larger audience of travelers who'd be able to afford it. Add to that the value of proprietary technology the company is developing, and Virgin Galactic is a play on a brighter future for aerospace.
3. Palantir Technologies
Data analytics are all the rage right now. Once you've collected all the information that a typical business gathers, it only makes sense to put it to use, and Palantir Technologies (PLTR -1.16%) has found its niche in helping a number of high-profile government agencies join the digital revolution.
Palantir's connections with the federal government have drawn some criticism, especially given the confidential nature of some of the information involved. However, a dollar of revenue is just as good when it comes from the government as when it comes from private enterprise. You can also ask any defense contractor just how lucrative government contracts can be over the long run.
Yet don't think that Palantir is leaving the private sector untouched. The company's Foundry platform is gaining traction in the corporate world with a focus on data security, complex analysis, and information-driven strategic planning that is particularly useful in commercial contexts.
Think big for 2021
None of these three stocks is a screaming bargain, and that's a big departure if you generally gravitate toward value investing. However, among top Robinhood stocks, these three companies offer attractive potential rewards for the risk you're taking on. Whether you buy them now or just put them on a watchlist, keep your eyes on Palantir, Virgin Galactic, and Snap in 2021 to see whether their businesses keep taking off.