Robinhood is one of the most popular stock brokerage apps because it makes investing in stocks dead simple. Better yet, you can do it at no cost.
But easy isn't always better if it lures you into taking fliers on stocks that have no business attracting a following, and it's fair to say a lot of the most popular stocks Robinhood traders own are questionable plays at best.
Below are the investing app's top five stocks, which we'll pair up against the opinions of investors at Motley Fool CAPS to see if using the wisdom of crowds to find winning investments is a better bet.
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CAPS aggregates the opinions of tens of thousands of players to assign ratings to each stock's likelihood of outperforming the market, from one to five stars, with five being tops. Players are also rated based on how well their stock picks perform, with those earning higher ratings having more influence on a stock's rating.
So if you've proven your investor prowess with a great stock-picking track record, CAPS gives your opinion more weight.
Looking at a company's CAPS rating puts the wisdom of crowds to your advantage to build your own portfolio of winning stocks.
1. Tesla (CAPS rating: 2 stars)
Tesla (TSLA -3.57%) is the top stock on Robinhood, but it doesn't rank very highly among CAPS players. So far, the market has sided with the mobile app's traders.
Shares of the electric car maker have soared 620% over the last 12 months, though year to date the stock is down 2%. Just the other day, an analyst said the market has lost its mind when it's come to Tesla, and rather than the near-$700 per share price tag it carries, it really deserves to trade closer to $150 per share.
Roth Capital analyst Craig Irwin says investors are pricing the EV maker as if it has no competition, and though Tesla has many things going for it and its deliveries far surpassed Wall Street projections, its $660 billion valuation is equivalent to the entire U.S. and European auto industries, combined!
Time will tell whether Tesla will be able to live up to such a lofty valuation, but right now CAPS players seem to agree the price tag on the EV maker is priced to perfection.
2. Apple (CAPS rating: 4 stars)
Apple (AAPL -0.57%) seems to be a stock everyone can agree is a top tech company worth owning. The second-most popular stock on Robinhood also earns kudos from CAPS, where almost 33,000 players have weighed in on the company and 93% of them feel Apple will outperform the market over the long haul.
The tech giant does seem to have an uncanny ability to upend the gloomiest forecasts of Wall Street, whose analysts always seem to think Apple's latest iPhone iteration or Mac computer has finally run its course.
At least one analyst, though, thinks Apple is in the midst of a "supercycle" that will propel its stock even higher despite the ravages of a chip shortage on the rest of the industry. Wedbush analyst Daniel Ives said his channel checks show iPhone production growing at mind-numbing rates and should approach 56 million to 62 million units.
Because Apple designs its own chips, it has been largely immune from the shortage that is causing other manufacturers to delay or suspend production on their own smartphones.
3. Sundial Growers (CAPS rating: 1 star)
Needless to say, Robinhood traders and CAPS players have different outlooks on Sundial Growers (SNDL), the marijuana producer everyone seems to love to hate after an earnings report last month underwhelmed Wall Street.
Although pot legalization in Canada was supposed to open the floodgates of growth for producers, government bungling has delayed the onslaught of demand. Those kinks are getting worked out, however slowly, but in the meantime producers like Sundial languish. Last year it was the worst-performing stock on the entire market and this year isn't so grand either.
As ugly as it's been, Sundial's stock has still doubled in 2021, albeit after losing 75% of its value following the February spike as Reddit forum traders looked for the next stock to bid up. Analysts are also divided on its outlook, with one calling for a $0.65-per-share price target and another saying $1.15 is closer to the mark.
Only a few dozen CAPS players have weighed in on Sundial Growers, and though over three-quarters of them do think the marijuana grower will outperform the market, they're just not fully convinced of its overall viability, earning the stock a single star.
With branded cannabis accounting for over 75% of Sundial's sales, there may just be a chance this marijuana stock warrants the confidence that's been placed in it.