In an earlier time, the term "Robinhood stock" may have conveyed images of frenzied day traders pounding the buy button for meme stocks like GameStop and AMC. But over time, these traders have grown more sophisticated, and many of the most-owned stocks on the app mirror those of the top holdings of savvy investing veterans.
There is something to be said for the wisdom of the crowd and the power of the hive mind. Looking at the most-held stocks on the Robinhood platform, here are three that smart investors can buy and hold forever.
Image source: Getty Images
1. Starbucks
NASDAQ: SBUX
Key Data Points
Starbucks (SBUX +0.30%) has hit a rough patch in 2022 so far, but savvy investors know that the company has proven to be a winner over the long term. The shares have lost about a third of their value so far in 2022 as inflation and the company's heavy presence in China (at a time of strict COVID-19 lockdowns) have combined to knock the stock down about 35% year to date.
But patient Robinhood investors look likely to be rewarded for sticking with the world's largest coffee chain over the long term. The poor results in China overshadowed the fact that Starbucks is actually firing on all cylinders elsewhere. For example, in the most recent quarter, Starbucks grew same-store sales in North America by 12%, an eye-popping return for a company that has had an established footprint in North America for decades with interim CEO Howard Schultz (in that chair for the third time) describing domestic demand as "relentless."
In the near future, conditions in China should improve for Starbucks as the government just eased most of its COVID-19 restrictions and ended the lockdown in China's largest city, Shanghai. Starbucks has a massive presence in the country with over 5,000 locations, and these locations can expect more visitors soon as Chinese consumers emerge from lockdown and get back to their normal routines.
Longer term, Schultz is confident that China will eventually become a bigger market for the company than the U.S. In addition to its extensive physical presence, Starbucks has also partnered with Chinese mega-caps like Alibaba and Meituan to expand its reach in the country.
As the company forges long-term strategic alliances to bolster its massive physical presence in the Chinese market and continues to grow in North America and beyond, Starbucks is a proven winner that long-term investors can feel good about buying and holding forever.
2. Ford
NYSE: F
Key Data Points
Some investors may view Ford (F 1.66%) as an outdated, clunky legacy auto company, but in reality it is in the middle of a multi-year turnaround to transform itself into a top player in both electric and traditional vehicles. Ford's new Mustang Mach-E recently unseated Tesla's Model Y as Consumer Reports' top electric vehicle for 2022. Meanwhile, the Ford Maverick was just awarded North American Truck of the Year while the Bronco took home the prize for North American Utility Vehicle of the Year. Ford's popular F-Series pickup is the best-selling vehicle in the U.S. with over 725,000 units sold in 2021.
You may be thinking that electrification is all well and good, but how does it benefit the stock? An exciting lineup of electric vehicles can expand the company's reach beyond its core customer base and bring new customers into the fold. Morningstar found that 70% of Mustang Mach-E buyers are first-time Ford buyers. Three-quarters of customers who reserved an F-150 Lightning are also new to the company.
In addition to a number of successful product launches and a promising start toward creating a portfolio of desirable electric offerings, Ford trades at a very attractive valuation of just under five times earnings, which is far cheaper than the broader market. While some discount is warranted as this is a challenging market for automakers, this could also be a good entry point for Ford.
Ford also sports a dividend yield of just under 3%, which can help add to your long-term returns as a Ford shareholder. With its turnaround underway, a conveyor belt of award-winning and best-selling products, and a modest valuation, Ford looks like the type of stock that Robinhood investors -- and all investors -- can buy and hold for the long term.
3. ChargePoint
NYSE: CHPT
Key Data Points
ChargePoint (CHPT 1.69%) is another popular stock with Robinhood investors, although it is probably less well-known than the previous two names on this list. ChargePoint sells electric vehicle charging ports and is the leading Level 2 electric vehicle charging company in the U.S. in terms of market share.
Looking at the plans of some of the top U.S. automakers, increased electric vehicle production is a secular trend that is here to stay. With Ford planning to invest $50 billion in electric vehicles through 2026, Stellantis (parent company of Jeep, Ram, Maserati and more) planning for electric vehicles to make up 50% of its sales mix in the U.S. and 100% in Europe by 2030, and General Motors setting its sights on selling two million electric vehicles in the U.S. annually by the mid-2020s, there are going to be a lot more electric vehicles on the road over the next decade.
Therefore, a lot more infrastructure for charging electric vehicles will be needed, and ChargePoint represents a compelling pick-and-shovel investment. With 70% market share for charging in North America, ChargePoint should be a key beneficiary of this trend without having to choose an individual vehicle company as a winner.
ChargePoint is not yet profitable, so it is more speculative than Ford or Starbucks. But given the dominant market share the company has built and the way it has grown revenue over the last few years, it is a company that I want to buy and then set aside as a long-term holding for the foreseeable future.
In conclusion, there is a lot of collective wisdom to be found on the Robinhood leaderboards, and these three companies are all examples of the types of stocks investors can feel good about buying and holding forever.
