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3 Robinhood Stocks That Are Great Long-Term Picks

By Adria Cimino – Dec 16, 2021 at 6:00AM

Key Points

  • One of these companies is investing in the business now, and investors should reap rewards in the future.
  • The second company recently reported record revenue after revamping its store portfolio.
  • The third company may become a big player in the metaverse.

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Attention: Growth drivers ahead.

Some of the most popular stocks on Robinhood Markets are ones that have delivered massive gains in a short period of time. AMC Entertainment and GameStop are good examples of that. They've soared more than 1,000% and 600%, respectively, this year. But Robinhood investors also are buying plenty of other shares that have what it takes to climb over the long term.

The following three consumer stocks are among the 100 most popular stocks on the online trading platform. They aren't players that will surge overnight. But their earnings growth and future potential should progressively power them higher well into the future.

An investor uses a tablet while sitting near an office window.

Image source: Getty Images.

1. Amazon

Amazon (AMZN -1.90%) hasn't exactly been a superstar from a stock performance point of view this year. The stock is up less than 5%. But Amazon's long-term track record is solid. The company's share price has steadily climbed over the past decade, and profit and revenue started taking off about five years ago.

AMZN Chart

AMZN data by YCharts

In the near term, Amazon may not please everyone. The company is investing in its business -- for instance, Amazon almost doubled its fulfillment network since the start of the pandemic, and this equals costs. But I'm optimistic Amazon's revenue and profit gains will continue over the long term. Analysts predict the recent shift to e-commerce isn't about to fade away. Amazon's Prime membership program and selection of free delivery options should also keep customers loyal.

But Amazon isn't only about shopping. In fact, Amazon Web Services (AWS) may be the secret of its success. This leading cloud computing player generally represents more than half of Amazon's operating income -- and in the most recent quarter, AWS posted 39% sales growth. Amazon's investment in its future and AWS' growth are reasons to believe this retail giant can deliver great returns down the road.

2. Starbucks

After a dip during the worst of the pandemic, Starbucks' (SBUX -1.41%) stock price, revenue, and net income quickly recovered -- and went on to gain.

SBUX Chart

SBUX data by YCharts

In fact, in the fiscal fourth quarter ended Oct. 3, Starbucks reported a 31% increase in revenue to a record $8.1 billion. Earnings on a generally accepted accounting principles (GAAP) basis rose to $1.49 from $0.33. And 90-day active members of the coffee shop giant's loyalty program increased 28% to more than 24 million in the U.S.

The reason for such gains? During the pandemic, Starbucks launched a plan to meet coffee drinkers where they want to be. This means considering the entire coffee ordering and drinking experience. Starbucks accelerated a plan to open more shops focused on mobile ordering and pickup. It increased its drive-thru locations. And it focused on innovation. For example, Starbucks partnered with Air Canada so that Canadian customers can link their airline and Starbucks accounts and benefit from more rewards. We're just starting to see the fruits of these efforts, and it looks like there's a lot more growth to come. So investors who stick around for the long term are most likely to benefit.

3. Nike

You can count on Nike (NKE -4.86%) for revenue growth through sales of its sneakers and athletic gear. But soon, you may be able to count on this popular brand for revenue linked to the metaverse. The company recently said it's buying virtual sneaker company RTFKT. Earlier this year, RTFKT said a sale of its sneakers sold out in minutes for a total of more than $3 million.

And last month, Nike announced the creation of "Nikeland" on gaming platform Roblox. There, visitors can play games and dress their avatars in Nike gear. We can imagine Nike monetizing these efforts by selling non-fungible tokens or even actual sneakers linked to the virtual world at some point in the future.

Of course, Nike still has plenty of room to grow in the real world too. Back in 2017, the company decided to focus on digital and direct-to-consumer sales as well as building relationships with fans through its loyalty program. The investment is working. Sales and revenue are both heading higher at Nike.

NKE Net Income (Annual) Chart

NKE Net Income (Annual) data by YCharts

The general financial picture also is bright. In the most recent earnings report, Nike said cash and equivalents totaled more than $13 billion. That's about $4 billion higher than in the year-earlier period. And in the quarter, Nike paid out $435 million in dividends to shareholders -- up by 13% year over year. So, whether you're looking for a real world stock or a metaverse stock to hold on to for the long term, Nike may fit the bill.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino owns Amazon. The Motley Fool owns and recommends Amazon, Nike, Roblox Corporation, and Starbucks. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, short January 2022 $1,940 calls on Amazon, and short January 2022 $115 calls on Starbucks. The Motley Fool has a disclosure policy.

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