Robinhood (NASDAQ: HOOD), the online brokerage that popularized commission-free trades among retail investors, is often associated with meme stocks, speculative option trades, and cryptocurrencies. However, Robinhood's investors also hold plenty of promising blue-chip stalwarts and growth stocks in their portfolios.
According to Robinhood's own investor index, Walt Disney (DIS -0.83%), Apple (AAPL -0.81%), and NIO (NIO 2.62%) are among the most widely held stocks on its platform. Let's see why these three stocks could also deliver promising returns for long-term investors who might not think of themselves as "Robinhood" traders.
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1. Disney
Disney's stock closed at a record high of $201.91 per share on March 8, 2021, but it now trades more than 50% below that level. The House of Mouse was once considered a great post-pandemic reopening play as consumers flocked back to the movie theaters and its theme parks, but lost its luster as investors focused on its streaming losses and CEO Bob Chapek's tendency to aggressively cut costs instead of foster growth.
That's why many investors cheered when Disney fired Chapek last November and brought back Bob Iger, who had previously led the company for 15 years. Yet Iger's recent decision to lay off 7,000 employees, or 3% of its global workforce, suggests the company still faces intense pressure as its streaming losses compress its margins.
That said, Iger is also the visionary leader who led Disney through its multibillion-dollar acquisitions of Pixar, Marvel, and Lucasfilm, and he laid down the foundations of its streaming ecosystem -- which now serves 235 million subscribers -- back in 2019. So if anyone can breathe fresh life into Disney's business, it's probably Iger.
Despite all those challenges, Disney's revenue and adjusted EPS still grew 23% and 54%, respectively, in fiscal 2022 (which ended last October) as its theme park and media businesses recovered in a post-pandemic market. Analysts expect revenue and adjusted EPS to rise 8% and 18%, respectively, this year.
Therefore, investors who can tune out the near-term noise and focus on the evergreen appeal of Disney's brands and properties will likely think its stock is reasonably valued at 22 times forward earnings.
2. Apple
Apple's stock closed at its record high of $180.68 on Jan. 3, 2022. It's only pulled back about 10% from those levels since many investors still regard Apple as a safe bear market buy as interest rates continue to rise. That sterling reputation is justified by its four core strengths: its brand appeal, the stickiness of its services (which locked in 935 million paid subscribers last quarter), its consistent earnings growth, and its $165 billion in cash, cash equivalents, and marketable securities.
Apple's revenue only rose 8% in fiscal 2022 (which ended last September), compared to its 33% growth in 2021. That slowdown was caused by tough comparisons to the launch of the iPhone 12, its first family of 5G smartphones, in 2021. Analysts expect that slowdown to persist in fiscal 2023 and that revenue and EPS will decline 1% and 2%, respectively. Those declines can be attributed to macroeconomic headwinds, supply chain constraints, and unfavorable currency exchange rates.
Faced with that near-term slowdown, Apple might look a bit expensive at 27 times forward earnings. However, that multiple also doesn't fully factor in the launch of its upcoming mixed reality headset or other new services. Apple also plans to keep repurchasing tens of billions of dollars in shares every year -- even if it faces a cyclical slowdown. That mix of stability and long-term growth still make Apple a compelling investment in this wobbly market.
3. NIO
NIO is one of the top producers of high-end electric sedans and SUVs in China. It currently sells four types of SUVs (the ES8, ES6, EC6, and ES7) and two types of sedans (the ET5 and ET7). Unlike many smaller American EV makers that went public by merging with special purpose acquisition companies (SPACs) and then failed to meet their own lofty production goals, NIO already produces a steady stream of EVs.
NIO's total deliveries rose 113% in 2020, 109% in 2021, and 34% to 122,486 vehicles in 2022. Its revenue rose 36% to 49.27 billion yuan ($7.14 billion) last year, but its adjusted net loss widened from 3.01 billion yuan to 12.14 billion yuan ($1.76 billion) as its margins were squeezed by COVID-19 disruptions, extreme weather conditions, and supply chain constraints. But most of those headwinds should dissipate as China finally rolls back its COVID-era restrictions.
So for 2023, analysts expect NIO's revenue to jump 74% to 85.88 billion yuan ($12.5 billion) as its net loss narrows to 11.69 billion yuan ($1.7 billion). At $10 a share, NIO trades at just 1.4 times this year's sales -- which makes it much cheaper than most of its industry peers. NIO's stock has already plummeted more than 80% from its all-time high of $62.84 per share on Feb. 9, 2021, so it might catch on fire again once a new bull market starts.
