Investors using the Robinhood Markets platform usually are on the hunt for stocks that will beat the rest of the market right now. Sometimes the most popular companies on Robinhood will indeed soar in the short term. But they don't necessarily make the best long-term bets.
Still, there are some popular Robinhood stocks that offer near-term and long-term potential. They've proven their ability to grow earnings. And we have reason to believe that revenue and profit growth will continue well into the future. Here, I'll talk about two that fit the bill. They're beating the S&P 500 this year -- and this could become the trend.
Image source: Getty Images.
1. Moderna
Moderna (MRNA 0.17%) surged to the forefront last year when it emerged as one of the leaders in the coronavirus vaccine race. The company became the second to launch a vaccine -- only weeks after bigger rival Pfizer. And this year, Moderna has generated billions of dollars in revenue and profit thanks to vaccine sales. As a result, the shares have continued to gain. They climbed about 160% after a 434% increase last year.
Some worry that Moderna's stock performance will suffer in a post-pandemic world. But it's becoming clear that vaccine or booster sales won't drop off. New variants continue to emerge -- omicron is the latest. And experts have said the virus will be around for a while. So, we'll need ongoing protection -- and that should equal sales of vaccines or boosters for Moderna.
At the same time, Moderna is progressing in other pipeline programs. The closest to market is a phase 3 cytomegalovirus (CMV) vaccine candidate. Right now, a vaccine doesn't exist for CMV. And this virus can be particularly dangerous for unborn babies and people with weakened immune systems. Moderna predicts a potential vaccine could quickly become a blockbuster. The company has more than 30 candidates in the pipeline. If even a small handful make it to market, Moderna's revenue could continue to climb -- along with its share price.
2. Tesla
Tesla (TSLA +3.53%) shares haven't replicated last year's 743% surge. Instead, they're on their way to a more modest 42% increase this year. But that's OK. Tesla is showing that it isn't just a trend of the moment. Instead, it has the potential to gain in sales and share price over time.
In the most recent quarter, the maker of electric vehicles reported record net income -- and operating margin of more than 14% surpassed its forecast. Tesla made these gains even amid challenges -- most importantly, a global chip shortage. Tesla uses chips in its cars for various control systems. In the quarter, Tesla managed to deliver more than 240,000 vehicles. That's a 20% increase from the previous quarter. And it's more than a 70% increase year over year.
Why am I optimistic such gains will continue? Tesla is the market leader right now -- and it's making the necessary moves to remain in that position. The company is working to grow manufacturing capacity. The goal is to reach an average of 50% annual growth in deliveries. The company is building out production facilities in Austin, Texas and Berlin, Germany. Production in those locations may start at any time now. Tesla says that the more cars it has on the road, the more it expects to win over more customers. The production ramp up will be key to making that happen.
Beating the market
Both Moderna and Tesla have far surpassed the S&P 500 this year.
As mentioned, these leaders in their field are growing earnings. And both companies also are showing an increase in return on invested capital, one key measure of financial strength.
MRNA Return on Invested Capital data by YCharts
Moderna and Tesla already are market winners. But the story is far from over. If these innovative companies can meet upcoming goals, they may continue beating the market for the long term. And that's great news for investors who have bought -- or plan on buying -- the shares and holding on to them.
