Robinhood's (HOOD -1.10%) influence on the stock market may have waned since the heady days of the pandemic, but the disruptive stock-trading platform still wields signficant influence over the market in part because it is so popular with millennials.
The average age of a Robinhood user is 31, and the company has more than 12 million monthly active users and nearly 23 million funded accounts, showing that it remains a major player in the brokerage industry.
Robinhood also influences the market in other ways -- for instance, its 100 most popular stocks list. The list, which includes some household names and a few more obscure stocks, is a good place to start if you're looking for some new investing ideas. Keep reading to see two such Robinhood stocks that look set to beat the market.
1. A timeless entertainment giant
Disney (DIS -1.01%) has been the first name in family entertainment for generations. Its theme parks are among the most popular vacation destinations in the world, and its movies often dominate the box office. It also has a unique flywheel model where it can use the same intellectual property to drive sales in categories such as movies, theme parks, and consumer products like toys.
Despite the company's long track record of success, Disney the stock has been a disappointment of late, down 36% year to date.
The company missed estimates on top and bottom lines in its most recent earnings report, and its profits actually shrank from a year ago as its loss in its streaming segment widened significantly. It also lost $4 billion in the just-ended fiscal year in streaming, compared to a $1.6 billion loss in the year before.
However, there are a number of reasons why things could soon be looking up for the entertainment giant. First, the company just brought back Bob Iger as CEO, ending the tenure of Bob Chapek, who alienated creative talent with his restructuring of the business and presided over the stock's recent slide and underwhelming business performance.
Additionally, the company is launching its ad-based tier of Disney+ next month, and it will raise its prices on its ad-free tier at the same time, essentially ensuring a boost to its streaming revenue. In its most recent earnings call, the company said that its loss in streaming had peaked, and that it expected Disney+ to be profitable by 2024.
Disney's theme parks business is thriving, and its box office releases should get a boost as movie theater traffic picks up following the pandemic's height. Considering the discount in the stock, the enthusiasm for Iger, and the launch of the ad tier, Disney looks like a good bet to outperform the market over the next year.
2. A bulletproof tech stock trading at a discount
Like Disney, Alphabet (GOOG -1.96%) (GOOGL -1.97%) stock is down sharply, off 33% this year.
The Google parent's digital advertising business has slowed due to difficult comparisons, and as macroeonomic headwinds have strengthed. Revenue growth, for example, slowed to just 6% in the quarter. On the bottom line, profits have shrunk as the company has ramped up spending on new employees and other line items like research and development and marketing.
However, management said it would slow the pace of hiring in the fourth quarter and into next year, helping to control costs as it enters a period of slowing revenue growth.
The other reason to bet on a comeback from Alphabet stock is that it still dominates internet search, with more than 90% market share around much of the world. That business is well protected, and, in fact, there's some evidence that digital advertising demand has shifted from social channels to search.
Overall, digital advertising demand is down as companies look to conserve resources heading into a potential recession, and are betting on a pullback in consumer spending. Advertising is cyclical, and it should recover once the economic outlook improves for the businesses that buy ads. Alphabet saw revenue growth slow in the financial crisis and the pandemic, but it quickly recovered both times, and the same thing is likely to happen again.
Alphabet stock now trades for a price-to-earnings ratio of 19, slightly less than the S&P 500, even though the company has a monopoly in search, huge margins, and a historic growth rate.
Alphabet stock looks set to surge once the economy improves and advertising demand bounces back.
