Robinhood Markets (NASDAQ: HOOD) may not have the buzz it did during the height of the pandemic, but the app-based brokerage still wields a lot of influence in the investing world.
The company has more than 23 million funded accounts and nearly 11 million monthly active users as of its most recent quarter, and its user base skews young, estimated at an average age of 31.
That means Robinhood offers insight into how millennials are investing, and it also publishes a list of the 100 most popular stocks on the platform. Keep reading to see three top stocks to buy from that list.
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1. Airbnb
The Robinhood top 100 list tends to skew toward tech stocks so it shouldn't be a surprise to find Airbnb (ABNB 0.75%)among the ranks. The home-sharing platform has become one of the most popular ways to travel, especially with millennials who appreciate the flexibility toward budgets and locations that Airbnb allows, not to mention the ability to earn money hosting on the platform.
Airbnb stock has soared this year along with much of the rest of the tech sector, but the company still has plenty of upside potential over the long term.
Growth remains strong with revenue up 18% to $2.5 billion in the second quarter, and the company is highly profitable as its adjusted earnings before interest depreciation and amortization (EBITDA) margin was 33%.
Despite concerns about a regulatory crackdown, the company continues to increase supply, which may be the most important factor driving its long-term growth. In fact, the company said that in every quarter since its 2020 IPO, growth in total active listings has accelerated. Supply increased 19% in the second quarter, and the company now has more than 7 million listings on its platform.
Airbnb's brand, network effects, and market leadership give it a strong set of competitive advantages, and over the long term CEO Brian Chesky aims to expand the brand beyond the core, launching new products and services. That could make the stock much more valuable than it is today.
2. PayPal
While much of the tech sector has soared this year with the Nasdaq Composite Index up 32%, PayPal (PYPL 2.90%) has missed the boat, down 12% year-to-date and plunging nearly 80% from its peak in in 2021.
There are legitimate reasons for its underperformance, including emerging competition from Apple, slowing growth in branded payments, and difficult comparisons in digital payments following the boom during the pandemic.
However, the sell-off offers a buying opportunity as PayPal stock is trading at a good value, is still growing, and delivering strong margins. PayPal is currently valued at a price-to-earnings ratio of just 13.5, a valuation generally reserved for slow-growth stocks. However, the company reported 7% revenue growth in its second quarter with adjusted earnings per share up 24% to $1.16. For the full year, it expects adjusted EPS to increase 20% to $4.95 and is also targeting $5 billion in share repurchases, which would reduce shares outstanding by 7% at its current market cap.
The company could also be energized by the arrival of a new CEO at the end of the month as Alex Chriss, who formerly led Intuit's small business and self-employed group, will take over.
Investor expectations for the stock are clearly low, which could help support a rebound.
3. Realty Income
A Real Estate Investment Trust (REIT) might seem like an odd fit for the Robinhood crowd, but Realty Income (O -0.17%), a steady dividend payer, makes the top 100 list.
Realty Income manages mostly stand-alone retail properties and operates through triple-net leases, a low-risk strategy in which the tenant is responsible for insurance, maintenance, and property taxes.
That approach to real estate management has been a winning strategy for Realty Income, which currently offers a juicy dividend yield at 5.6% and is popular among dividend investors because it pays a monthly dividend.
Revenue in the second quarter increased 26% to $1.02 billion as it's rapidly expanding its property base, now holding more than 13,000 properties with 1,303 clients. Its occupancy rate was 99%, and its top tenants include Dollar General, Walgreen's, and Dollar Tree.
Realty Income's business model makes it a good bet to ride out any macroeconomic volatility, and its dividend should continue to reward investors. If you're looking for a steady dividend stock to buy, Realty Income is hard to beat.
