The influence Robinhood's commission-free trading platform seemed to have on certain stocks' performances was a big story in 2020, and the service will continue making trading more accessible to a new generation of investors. The Robinhood user base might broadly have a reputation for pursuing risky short-term trades, but there are also industry giants popular among investors on the platform that stand out as promising long-term bets.
Read on for a look at three large companies that are broadly held across Robinhood's free trading platform that are worth buying in January.
Image source: Getty Images.
1. Ford
In the automotive space, 2020 was all about electric vehicles (EVs). Companies including Tesla and NIO dominated the headlines and posted stellar stock performance, but Robinhood investors haven't overlooked other promising players in the space. Auto giant Ford (F 0.69%) came in as the No. 4 most commonly owned stock on the platform at the start of 2021.
Tesla is undeniably the hotter rising brand at the moment, but it's worth remembering that Ford has stood the test of time and shown it can adapt to changes in the market. The auto stalwart also has a much more conservative valuation that may prove to better reflect the margin realities of the auto market.
While the attention-grabbing EV darlings trade at nosebleed valuations, Ford is priced at much more reasonable levels. The stock trades at just eight times this year's expected earnings, and the company is valued at roughly a fifth of this year's expected sales.
New EV-focused companies are soaking up so much of the market and media attention, and investors may have a golden opportunity to take advantage of Ford's reputation as a lumbering dinosaur that's incapable of innovating in the auto space.
Strong sales indicators for the company's upcoming Bronco SUV line point to a positive catalyst for the auto giant, and its F-Series pickup trucks continue to be category leaders. The company is also still just getting started in the EV space, and it's a mistake to think it won't be able to build significant market share in the category.
2. Disney
The year 2020 was a challenging one for Walt Disney (DIS -1.01%), the 10th-most-held stock on Robinhood. The coronavirus pandemic resulted in closures for the company's theme parks, resorts, and cruise lines. It also resulted in cancellations and delays for sporting events and other entertainment productions. If that weren't enough, it also crushed the House of Mouse's theatrical film segment.
On the other hand, the challenging operating conditions have also highlighted many of the company's strengths and shown that the business is resilient and moving in the direction of the future of entertainment.
The big story over the last year was the tremendous success of the Disney+ streaming platform. Subscriber growth for the service has far exceeded expectations, with the company notching 86.8 million paid subscribers as of early December. It now expects to close out 2024 with between 230 million and 260 million paid subscribers, a dramatic increase from its original target for between 60 million and 90 million paid subscribers.
Outside of The Mandalorian, there haven't been that many big new shows or films to bring users to the platform, but Disney+ has still been a tremendous success. With a slew of TV series and films set in the universes of Star Wars, the Marvel Cinematic Universe, and other big franchises, the streaming service will likely continue to see very strong subscriber growth. Disney nailed its transition to streaming, and the company's ownership of more valuable entertainment properties than any entertainment industry competitor puts it in good position for continued success.
3. Amazon
Amazon (AMZN -1.65%) started 2021 as the No. 12 most commonly owned stock on Robinhood, and it stands out as a great long-term investment no matter what brokerage you might be using to trade. When it comes to an ability to thrive in rapidly shifting and uncertain circumstances, few companies can stack up to Amazon's strengths and versatility.
The company was perfectly positioned to capitalize on the unprecedented conditions created by the pandemic in 2020, and the company's stock surged 76% across last year's trading. As with earlier points in the company's market-crushing history, investors shouldn't be deterred by strong gains for the stock. This is a business that's shaping the world and still looks incredibly well-positioned to thrive over the long term.
The e-commerce revolution is still just getting started, and Amazon is the clear leader in the space. The company also has a leading position in cloud computing, another market that looks poised for big growth over the long term. Under the guidance of CEO Jeff Bezos, Amazon has built dominant positions in service categories that are reshaping how the world does business and other facets of everyday life.
The company's leading role in shaping technology and commerce innovations is likely just getting started. Amazon has already secured market leadership in voice-based operating systems with its Alexa platform, and it is making big bets on artificial intelligence (AI). In addition to revolutionizing delivery capabilities for the company's e-commerce platform, investments in AI, robotics, and self-driving vehicle systems could turn into growth drivers in their own right.
Amazon has a history of market-defining innovations. The stock's gains so far have been legendary, and it looks like the tech giant will continue delivering wins for many years to come.
