The commission-free trading platform Robinhood is popular among novice investors, millennials, and traders. These groups of market enthusiasts can certainly pick excellent stocks, as evidenced by the list of the 100 most popular stocks on the platform. However, some of the stocks on that list are head-scratchers. For instance, GameStop (GME -3.56%) and AMC Entertainment (AMC -8.03%) are among the top 20 most commonly held stocks on the app as of this writing.
Both of these businesses are struggling, in part due to their reliance on brick-and-mortar operations, which were severely impacted by the pandemic. Further, both AMC and Gamestop were at the center of the now (in)famous short-squeeze fiasco orchestrated by traders from Reddit's r/WallStreetBets. Investors would be better off staying away from these two unpredictable companies and instead purchasing shares of Robinhood stocks with solid futures ahead of them. Two such companies worth considering are Pfizer (PFE 3.59%) and Netflix (NFLX 1.56%).
You've probably heard a lot about Pfizer in the past few months. The company and its partner, BioNTech, developed BNT162b2, and received Emergency Use Authorization from the U.S. Food and Drug Administration (FDA) in December, becoming the first authorized COVID-19 vaccine in the U.S. BNT162b2 has also been approved in the European Union.
While Pfizer and BioNTech have to share the vaccine supply gameboard with several other companies, including Johnson & Johnson, AstraZeneca, and Moderna, the market (i.e., the entire world) is large enough for there to be multiple winners. In other words, BNT162b2 will contribute meaningfully to Pfizer's top line, especially since there is evidence of it being effective against some of the newer variants of the virus.
But the company's lineup is much bigger than just this one vaccine. Some of Pfizer's top-performing products include anticoagulant Eliquis and cancer treatments Ibrance and Xtandi. Sales of Eliquis for fiscal year 2020 (ended Dec. 31) were $4.9 billion, a 17% year-over-year increase. Ibrance's revenue jumped by 9% year over year to $5.4 billion, while Xtandi's sales came in at roughly $1 billion, representing 22% growth from fiscal year 2019.
Pfizer also boasts 95 programs in its pipeline, including 24 ongoing phase 3 studies. Pfizer is well-positioned to keep adding new revenue sources to its lineup every year. Lastly, it is worth noting that Pfizer spun-off its off-patent medicine unit Upjohn to the company formerly known as Mylan. The combined entity of Mylan and Upjohn is called Viatris, and it started trading on the market on Nov. 17.
Pfizer decided to make this move because Upjohn's declining sales were hurting its bottom line. The company can now focus on its more profitable biopharma business. This focus should help Pfizer improve its financial results, which will help its stock recover from its underperformance relative to the market in the past year.
With a more focused business, a short-term catalyst in the form of its coronavirus vaccine, other medicines with growing sales, and a rich pipeline to keep revenue sources coming, this pharma stock looks like a much better long-term bet than AMC or GameStop.
Netflix is already one of the leading streaming video platforms in the world, but the company isn't done growing. What are the opportunities ahead for the tech giant? First, the company is looking to add even more users to its platform. As of its fourth quarter ending Dec. 31, the company had 8.51 million net new subscribers. It ended the period with a total of 203.7 million paid subscriptions, representing a year-over-year increase of 21.9%. Netflix thinks it will add 6 million new subscribers in the first quarter of 2021.
And the streaming services industry as a whole has a long runway for growth. According to Grand View Research, this market was worth 50.1 billion in 2020, and it is projected to expand at a compound annual growth rate (CAGR) of 21% between 2021 and 2028.
As one of the most recognizable names in this segment, Netflix is well-positioned to profit, especially since competing streaming platforms are more than capable of coexisting. One of the most powerful weapons in these platforms' arsenals is original content, and Netflix has been pouring money into original series and movies in the hopes of building a library people will want to keep coming back to.
These investments have played an important role in the company's success in recent years. Since the content on Netflix is different from that of some of its peers, many customers are more than happy to pay for subscriptions to several companies in this space. The long-term plan for Netflix is simple: Replace regular TV.
The company offers several advantages over cable: no ads, no long-term contracts, and on-demand movies and series streaming on any device. And while some cable providers have started to adapt to the new paradigm, Netflix is well on its way to continue its long winning streak in the streaming industry. Those factors make the company's stock worth a buy.