What kinds of stocks are most popular among Robinhood investors? You'll find an inordinate number of highly volatile and risky stocks on the list. While they ignite passionate enthusiasm for some, these stocks aren't well suited for less aggressive investors.
However, not all the stocks that are popular on the Robinhood trading platform are super-risky. You can rest peacefully buying and holding several of them. Here are my picks for the three safest Robinhood stocks you can buy right now.
Johnson & Johnson
What makes a stock safe? I'd name things like long track records, financial strength, diversification, and a solid business model. Johnson & Johnson (JNJ -0.55%) checks off all these boxes.
The healthcare giant was founded way back in 1886. J&J has successfully weathered quite a few storms along the way. It generated $82.5 billion in sales last year with profits totaling $14.7 billion. The company ranks as a Dividend King with 59 consecutive years of dividend increases.
The Wall Street Journal selected Johnson & Johnson as one of its top 10 best-managed companies of 2020. Fortune included J&J on its World's Most Admired Companies list, where it took the top spot in the pharmaceutical category.
There aren't many areas of healthcare where J&J doesn't compete. It's a leading maker of consumer health products, with household brands such as Band-Aid, Listerine, and Tylenol. The company's medical devices are used by physicians and hospitals across the world. Johnson & Johnson's pharmaceuticals business markets multiple blockbusters.
Roughly 70% of its total sales come from products for which the company holds either the No. 1 or No. 2 global market share position. Don't think, though, that J&J rests on its laurels. Around one-fourth of its total sales are generated by products launched within the last five years. And it continues to invest heavily in research and development and strategic acquisitions to stay on top.
All of those characteristics of a safe stock mentioned for Johnson & Johnson also apply to Microsoft (MSFT 0.98%). Founded in 1975, Microsoft claims a longer track record of success than most of the biggest technology companies in the world.
The company is on track to rake in more than $160 billion in sales this year with profits totaling close to one-third of that amount. Unlike most tech stocks, Microsoft even pays a dividend.
Name a high-growth area of technology, and there's a good chance that Microsoft is a leader in it. Artificial intelligence, augmented reality, cloud hosting, gaming, internet security, and work-from-home collaboration are just a few of the markets in which it's a leader.
Even with its impressive accomplishments so far, Microsoft isn't done growing yet. Its Azure platform continues to gain ground in the cloud hosting market. The Xbox enjoys increasing popularity with gamers. Microsoft recently introduced its Mesh mixed-reality platform that supports "holoportation" -- the ability to project a holograghic image anywhere.
Walmart (WMT 0.83%) is another popular Robinhood stock that should be safe to own for years to come. It's the biggest retailer in the world with around 10,500 stores in 24 countries after starting operations in Arkansas nearly 60 years ago.
Last year, Walmart generated revenue of $559 billion. Although retail profit margins aren't nearly as high as in many other industries, the company still pulled in a profit of $13.5 billion.
Sure, Walmart faces plenty of competition. But it has pivoted adroitly to establish a successful e-commerce platform and has held its own against even the most formidable rivals.
Walmart's secret to success throughout its history has been to invest in technology to gain a competitive edge. The giant retailer continues to bet big on innovative technology. For example, it invested heavily in General Motors' self-driving start-up Cruise in an effort to use autonomous delivery to reach more customers. Don't expect Walmart to relinquish its spot at the top of the retail market anytime soon.