There are several stocks on the list of the 100 most popular stocks on Robinhood that I wouldn't touch with a 10-foot pole. I simply don't think they're built for the long run. My view is similar to what Warren Buffett once said: "If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes."
However, there are also plenty of great stocks that are widely held by Robinhood investors. Some of them appear to have what it takes to deliver strong returns for years to come. Which ones are the best? Here are my three favorite Robinhood stocks to buy right now.
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1. Amazon
I continue to be amazed at how Amazon (AMZN -1.64%) finds ways to generate impressive growth year after year. It's a $1.75 trillion giant that demolished expectations with its first-quarter results. Who wouldn't be happy with revenue soaring 44% year over year and earnings more than tripling?
Amazon probably won't lose momentum anytime soon. While the pandemic has fueled tremendous growth in online shopping, e-commerce still only made up 14% of total U.S. retail sales in 2020. Amazon's core e-commerce platform still has a massive opportunity.
The company's Amazon Web Services (AWS) cloud hosting unit also has plenty of room for growth. Amazon anticipates the trend of organizations moving their apps and data to the cloud will continue after the pandemic ends. AWS currently has a backlog of $52.9 billion, a jaw-dropping number.
There's also a multitude of other growth drivers for the company. Advertising, gaming, groceries, online pharmacy, self-driving cars, smart devices with Alexa built in, and telehealth are just the tip of the iceberg. As big as Amazon is, I think this popular Robinhood stock will grow much larger over the next decade and beyond.
2. Square
I'm not sure that I've met a fintech stock that I didn't like. Square (SQ -1.57%) definitely ranks as one of the best in the category.
This stock would be worthy of investors' attention solely because of its seller ecosystem. Square initially focused primarily on payment processing for small and medium-size businesses. Over time, though, it dramatically expanded the products and services that it offers to its business customers. I think Square is still only in the early innings of what it can achieve in making it easier to run businesses.
Square isn't limited to its seller ecosystem. The company's Cash App provides another huge growth opportunity. What started out as a peer-to-peer payment app now supports buying and selling stocks and Bitcoin. It also has a debit card that allows users to pay online and in stores while receiving instant discounts with many retailers.
Square's market cap currently stands at over $110 billion. I think, though, that the company just might be able to reach a $1 trillion valuation over the next 5 to 10 years.
3. Microsoft
No other technology giant is as diversified as Microsoft (MSFT 0.37%). And it's that diversification, along with strong growth prospects, that make this popular Robinhood stock one of my favorites.
Microsoft is a leader in every area where it competes. The company runs multibillion-dollar businesses in PC hardware and software, business and productivity applications, and cloud hosting. All of these units delivered solid double-digit-percentage growth in the latest quarter.
I think the momentum for each of Microsoft's business segments will continue. Gaming revenue is skyrocketing with more demand for the Xbox than the company can meet. Working from home won't go away even after the pandemic ends, creating opportunities for Microsoft Teams collaboration software. Like Amazon's AWS, Microsoft's Azure cloud platform should attract more customers.
There's no doubt in my mind that artificial intelligence, augmented reality, and virtual reality will be more widespread than ever over the next decade. My view is that Microsoft is among the companies in the best position to profit from all three tech trends.
