Online brokerage app Robinhood ushered in the complete democratization of investing. More so than the deep discounters that came before, and with more than its share of hiccups along the way, the no-fee platform has made the stock market accessible to millennials who might not otherwise have put money into the market.
Not everyone is always taking away the right message, though. The very accessibility Robinhood offers often allows traders to view the stock market as one big casino, where they can place real-time bets on which meme stock will rally today rather than as a way to buy into U.S. businesses and the American economy.
Obviously, and thankfully, not every Robinhood user invests that way, and the top 100 holdings of those on the platform provide useful insights that you can use to your benefit. Below are three stocks that are dirt cheap that you might want to pick up for your own portfolio.
Midstream oil and gas provider Energy Transfer (NYSE:ET) operates one of the largest intrastate pipeline systems in the country, supporting some of the biggest, most prolific energy regions, including the Permian, Barnett, Haynesville, and Eagle Ford Shale.
It's an attractive play in the space because of the size and diversified range of its asset base, and it also provides investors with fairly stable cash flows from its portfolio of largely fee-based contracts. During the collapse in energy prices last year, that was especially helpful for maintaining Energy Transfer's financial base.
Energy Transfer is in the process of acquiring Enable Midstream Partners for $7.2 billion in an all-stock transaction. The deal is expected to be immediately accretive to its cash flows while adding gas gathering and processing capabilities in the Anadarko Basin while gaining significant gas gathering and processing assets in Oklahoma and Arkansas as well as in the Haynesville Shale in East Texas and North Louisiana.
The stock, though, trades at just eight times trailing earnings and next year's estimates while going for just seven times the prodigious free cash flow it produces, which totals $6.5 billion for the last 12 months.
Ford (NYSE:F) is spending big on electric vehicles. Forget what you think you know about this venerable automaker, the car and truck giant has its eye firmly fixed on the future, which it sees as increasingly electric.
Last month it increased the amount it was committing to spending on EVs by 36%, saying it would invest $30 billion on its electrified fleet by 2025, or some $8 billion more than it had said in February it wanted to spend. The Ford+ initiative it unveiled expects to have as much as 40% of its production be all-electric by 2030.
Now that's not as great as General Motors (NYSE:GM), which forecasts its fleet will be all-electric by 2035, but Ford is making a name for itself with its Mustang Mach-E and the recently unveiled F-150 Lightning.
Ford might also be bringing EV battery production in-house after saying it was opening a new $185 million research and development battery lab. It hasn't given up on the internal combustion engine, but that day could soon be coming.
The automaker also trades at a discounted valuation to next year's earnings, going for eight times estimates. It also exhibits deeply discounted multiples on sales and projected earnings growth rates. At a ridiculously low two times free cash flow, Ford stock should be on your radar.
Biotech Moderna (NASDAQ:MRNA) was obviously a huge beneficiary of the coronavirus pandemic after its COVID-19 vaccine was quickly rolled out on an emergency basis. It's been key to the widespread vaccinations that have occurred nationwide and is vital to Europe's efforts as well.
Along with Pfizer (NYSE:PFE), Moderna is poised to have its vaccine receive full approval from the Food and Drug Administration. That's significant because it requires a higher standard of validation from the regulatory agency and could encourage more people to become vaccinated. Just under 50% of the U.S. population has been vaccinated, according to the U.S. Centers for Disease Control, and the Biden administration has fallen short of its goal of having 70% of adults at least partially vaccinated by July 4.
However, with the Delta variant of the coronavirus becoming the dominant form for new cases in the U.S., there may be investor concern over the impact of Moderna's vaccine. While there has been no negative news about Moderna's vaccine and the Delta variant, my colleague Keith Speights notes studies in Israel are finding less efficacy for the Pfizer version when coming up against the variant.
Moderna, however, has a booster vaccine for variants in clinical studies now, which could provide a tremendous boost to its stock if found effective. Even though the stock is trading near all-time highs, Moderna still goes for just 12 times next year's earnings estimates and Wall Street expects the biotech stock will expand earnings almost 17% annually for the next five years.