Robinhood (HOOD 5.77%) has set off a revolution in the investing world. With a mobile-first strategy and no-fee commissions, the brokerage forced industry incumbents to play catch-up and made free commissions the norm.
Though Robinhood the stock has faded, the brokerage continues to wield significant influence in the market, especially with the younger generation; the average age of a Robinhood account holder is estimated to be 31. The brokerage now has nearly 23 million funded accounts.
It also shares the 100 most popular stocks on its platform, giving investors unique insight into what other Robinhood investors are buying. From this list, here are three Robinhood stocks that are great buys right now.
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1. Disney
Walt Disney (DIS 1.94%) is coming off a rough 2022 as streaming subscriber growth has slowed, losses from its division have mounted, and investors have questioned Disney's long-term strategy.
Those challenges culminated in the ouster of former CEO Bob Chapek in favor of Bob Iger, who led the company from 2005 to 2020.
Investors cheered the move. With Iger again at the helm, there are a number of reasons to believe Disney stock can bounce back, especially as there are already signs that the business is on the mend.
Management said in its fiscal fourth-quarter earnings call that it believed losses in its streaming division had troughed in the most recent quarter, and the company was targeting break-even profit in the direct-to-consumer segment by 2024, a sharp improvement from the more than $4 billion loss in fiscal 2022. The recent launch of its ad tier and price hikes should help on that front.
Meanwhile, the company's theme parks business continues to be a profit machine, generating nearly $8 billion in operating income in fiscal 2022, including consumer products, and the parks segment should benefit from the recent reopening of Shanghai Disneyland.
With the stock hitting another 52-week low, it shouldn't take much to spark a rebound. If profits start to improve, the stock should be rewarded in 2023.
2. Bank of America
You might be surprised to find Bank of America (BAC -0.19%) on the list of Robinhood's top stocks, but it's the 26th-most-popular stock on the Robinhood list.
Buffett's favorite banking stock also seems well-positioned going into 2023. With interest rates high and expected to keep rising, this should help Bank of America pad its net interest income next year. In the bank's third quarter, net interest income rose 24% to $13.8 billion, primarily due to higher interest rates but also as the company continues to grow its loan book. Loans and leases across the organization increased 12% to $1.03 trillion.
Recessions often bring a slowdown in borrowing as businesses grow more slowly or even contract, so the loan growth in the third quarter bodes well for the bank going into 2023. CEO Brian Moynihan has also said on multiple occasions that he only expects a mild recession in 2023 as consumer spending remains strong, and Moynihan has also pushed a culture of "responsible growth," which should protect the stock from downside risk.
If the bank can continue to grow into 2023, the stock looks like a good bet right now at a price-to-earnings ratio of 10.3 and a dividend yield of 2.7%.
3. Nike
Nike (NKE 2.29%) also finds itself on the Robinhood top-100 list, and it's easy to see why. It has one of the best-known consumer brands in the world and is by far the biggest sportswear company. Top athletes who have been sponsored by the brand include Michael Jordan, Tiger Woods, Serena Williams, and Lebron James.
Nike's most recent earnings report shows that its business continues to put up strong growth even in a difficult environment. Revenue in the latest quarter jumped 17% or 27% in currency-neutral terms to $13.3 billion. Considering the challenges that many of its retail partners have faced, that growth rate is especially impressive.
While earnings in the quarter were essentially flat (since the company is still in the process of liquidating excess inventory), inventory levels have peaked, and as they come down, that should help drive improving margins over the coming quarters. That will ensure that more of that additional revenue will flow through to the bottom line.
The revenue growth in the quarter shows that demand for Nike products remains strong, and the company continues to gain market share over rivals like Adidas and Under Armour. With its long track record of success and its current momentum, Nike looks like a good bet to outperform in 2023.
