There was a time not too long ago when serious investors only entertained recommendations from their brokerage firms, or at least from third-party research supplied by their broker. Tips from nonprofessionals were generally left ignored.
But much has changed over the course of just the past few years -- namely, technology has empowered the average amateur investor. And, as it turns out, these amateur stock pickers -- even ones with modest-sized start-up accounts -- can be pretty savvy.
Here's a closer look at three of the most popular picks users of brokerage app Robinhood Markets (HOOD 3.24%) are currently holding. They're far from being the dangerously speculative names you might expect. Indeed, they're so distinctly blue chippy that you may want to add them to your portfolio too.
Image source: Getty Images.
1. Walmart
Walmart (WMT -0.02%) is of course the world's biggest brick-and-mortar retailer, operating more than 5,000 locations in the United States alone, and about as many stores outside the U.S. No rival even comes close to matching its physical footprint.
Granted, that footprint didn't help curb its soaring costs last quarter. If anything, in fact, its huge network of stores caused its logistics costs to soar. The company saw total revenue improve to the tune of 2.4% for the three-month stretch ending in April, but a 3.5% increase in its cost of sales paired with a 4.5% uptick in operating expenses translated into a 23% dip in operating income.
Connect the dots: Sky-high gas prices, growing wholesale prices, and rising payroll expenses are taking a big bite out of Walmart's already relatively thin profit margins, causing the company to miss last quarter's earnings estimates by a pretty wide margin, and ultimately dragging the stock to more than 20% below April's high.
Look past all the recent noise, however, and remember what so many of Robinhood's brokerage customers are bearing in mind: This is Walmart. It's been challenged before and always rises up. This time isn't apt to be any different.
Take its efforts to automate more of its order-fulfillment work as an example. Just last month, it and robotics technology outfit Symbotic expanded a previous partnership to add automation at all 42 of the retailer's regional distribution centers. And just last week Walmart unveiled a partnership with DroneUp that will eventually facilitate aerial drone deliveries of online orders for 4 million U.S. households.
These ideas ultimately help the company contain payroll and gas costs, yet are just a sampling of the cost-containment work Walmart is doing. They just need a little more time to bear fruit.
2. Nvidia
Nvidia (NVDA 5.88%) is another name Robinhood's clients are sticking with despite some recent, mostly bearish turbulence from the stock. And rightfully so.
The good news is, Nvidia mustered record-breaking sales for fiscal 2023's first quarter (ended May 1). The top line of nearly $8.3 billion was up 46% year over year, easily topping expectations.
The bad news is, even that stellar revenue growth isn't stellar enough in the shadow of guidance for the quarter now underway. The company only anticipates revenue of $8.1 billion for the three-month period that will end in late July, falling just a bit short of analysts' projections, mostly due to logistics and supply chain woes. Nvidia CFO Colette Kress arguably tilted the almost-balanced scales in a bearish direction by adding that in light of all the uncertainties ahead, a hiring slowdown is already in effect.
But as is the case with Walmart, these collective challenges are more temporary than not. What awaits the company on the other side of all this turbulence is a huge opportunity in the artificial intelligence market.
As it turns out, the same underlying technological architecture that works well for its popular video cards also works well in artificial intelligence applications. In this vein, Nvidia's data center (where its AI hardware sales are booked) revenue of $3.7 billion last quarter not only made it the strongest grower for the three-month stretch but the company's single-biggest business unit.
Sure, the lingering supply chain crunch is a challenge. With technology market research outfit Technavio expecting the artificial intelligence market to grow by 21% per year through 2025, however, Nvidia is well-positioned to outgrow any supply chain challenges in the meantime.
3. PayPal
Finally, users of the Robinhood app have remained phenomenally patient with PayPal Holdings (PYPL 2.66%), with many of them riding out most of the stock's 70% slide just since July of last year.
The steep sell-off makes enough sense on the surface. The swell of online shopping stemming from pandemic-prompted lockdowns was clearly a boon for most digital payment platforms, but that growth pace was never going to last. That's because no matter what, bored consumers were eventually going to venture outside their homes again, where cash and credit cards are still major go-to means of making purchases. Other payment platforms -- and ones that facilitated cryptocurrency-based payments in particular -- were also being readied for launch right around the time COVID-19 began prompting lockdowns; they've continued to gain traction in the meantime.
To this end, last quarter's payment volume growth of only 15% pales in comparison to the company's growth pace of 46% for the comparable quarter a year earlier.
What so many Robinhood customers see, however, is that PayPal is still the digital payments market leader and poised to remain its leader for a long, long time.
Leveraging its already existing reach, analysts collectively expect this year's revenue growth projection of nearly 12% to accelerate to more than 16% next year, driving PayPal to yet another record-breaking profit of $4.84 per share for 2023. You can step into the fintech stock while it's priced at less than 18 times those expected earnings -- a heck of a lot cheaper than what many Robinhood users paid for it.
