Robinhood Markets (NASDAQ: HOOD) has changed the investing game with its easy-to-use app and commission-free trades, which pushed the rest of the industry to get rid of trading commissions.
While the buzz around Robinhood might have waned since the trading boom during the pandemic, the platform is still popular with millennials, and that makes it a good source for investing ideas. Luckily, it lists the 100 most popular stocks on its site, providing insight into what its investors are buying.
What follows are three top Robinhood stocks that are worth buying today.
Image source: Getty Images.
1. Airbnb
Like Robinhood, Airbnb (ABNB 0.10%) is another disruptor enabled by the mobile economy. In Airbnb's case, it has disrupted the hotel industry, making home-sharing a mainstream concept around the world.
As a stock, Airbnb has been volatile since late 2020 like the rest of the tech sector. But the business itself has delivered stellar results, bucking the broader trend in tech as the company has benefited from the economic reopening.
In 2022, revenue jumped 40% to $8.4 billion, driving a 49% increase in free cash flow (FCF) to $3.4 billion, and it reported its first full year of profitability under generally accepted accounting principles (GAAP) and net income at $1.9 billion. The business has become highly profitable as it has scaled up and laid off a quarter of its staff early in the pandemic.
While Airbnb's growth should slow in 2023 as the reopening tailwinds fade, the company still has a number of competitive advantages and should continue to gain market share in the travel industry. The stock also looks well priced at a price-to-earnings (P/E) ratio of 43, and it's even cheaper on an enterprise value/free cash flow basis.
The company also benefits from higher interest rates because it earns interest on the funds it holds between bookings and stays, making it a good hedge amid higher interest rates.
2. Microsoft
Over the last decade, Microsoft (MSFT -2.45%) has transformed itself under CEO Satya Nadella, leaving behind its reputation as a stodgy legacy tech company.
Microsoft Azure, its cloud infrastructure service, has quickly grown into a juggernaut. It is the biggest part of its intelligent cloud segment, which is now the company's largest source of revenue and profits, and it has made products like its Office software available on Apple (NASDAQ: AAPL) products.
Like other big tech companies, growth has slowed in this economy, but the company looks poised to lead the next major platform shift into artificial intelligence (AI). Thanks to its partnership with OpenAI, the start-up that created ChatGPT, Microsoft is rapidly deploying generative AI tools across its suite of products, including Azure, its Office productivity software suite, and its Edge browser. And its Bing search engine could take significant market share from Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google search engine with the help of ChatGPT.
Besides its AI initiatives, Microsoft also offers a degree of diversification that none of its peers can, making it the safest bet of the tech giants' stocks.
Its growth could be sluggish this year, but the recent round of layoffs should give its profitability a boost. Investors can expect the company to step on the gas pedal in AI, with a number of different ways to monetize the breakthrough technology.
3. Realty Income
You might be surprised to find Realty Income (O 0.24%) in Robinhood's Top 100. The real estate investment trust (REIT) doesn't fit the profile of the growth and tech stocks that are most common on the list, but its placement shows how popular dividend stocks have become in the current bear market.
Realty Income owns stand-alone, single-tenant properties, leasing to national and global chains like 7-Eleven and Walgreens (NASDAQ: WBA). It's a reliable dividend payer with a yield of 5%. It has even raised its dividend during the last three recessions, showing its ability to deliver growth even during difficult economies.
The company specializes in triple net leases, meaning tenants pay for property taxes, maintenance, and insurance, removing some of the risk of being a landlord. Its leases also come with regular rent increases, building in revenue growth for the company.
Realty Income has added perks for dividend investors: It pays dividends monthly and has raised its payout 120 times over the last 29 years, meaning investors can expect a dividend increase approximately every three months.
With a 5% yield, monthly payouts, and a long track record of dividend hikes in good times and bad, it's hard to find a better income stock than Realty Income.
