5 Top Robinhood Stocks to Buy, and 5 to Sell

Robinhood is a simple-to-use stock brokerage app attracting many first-time investors. Beyond cool features like zero commissions and fractional shares, Robinhood's 100 Most Popular is an insightful tool. It displays an in-order and up-to-date list of the most held securities on the trading platform. And the results are surprising.

Buying stock in great companies is a wonderful way to invest in one's future. And in some cases, Robinhood investors have indeed chosen wisely. However, in other cases, it appears they've grabbed shares of the riskiest ticker symbols available. What's worse, it's possible they don't know which is which.

Looking at Robinhood's 100 Most Popular, here are five stocks worth buying and holding for the long term. Followed by another five that should be sold immediately.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Many investors know Apple (Nasdaq: AAPL) for its iPhones, iPads, and Apple Watches -- technology hardware. In the fiscal third quarter of 2020, the company's product sales increased 10% from the third quarter of 2019 to $46.5 billion. Q3 is historically a slow quarter for product sales, so that double-digit growth was outstanding.

Investors might not know Apple's growth engine is its services-segment revenue -- things like Apple Pay, iTunes, and other apps. This revenue segment is much more profitable than products. In Q3, gross margin on products was 30%. By contrast, gross margin on services was 67%.

In Q3, Apple's services grew 15% year over year and contributed to the company's massive $11 billion profit. And this profit brought its cash pile up to $194 billion. Clearly, this is a financial behemoth that Robinhood investors are right to favor.

ALSO READ: Could This Be Apple's Big Break in This Major Market?

Facebook (Nasdaq: FB) was recently hit by an advertising boycott, but don't let that distract you from the bigger picture. Across this company's various services, it boasts 3.1 billion users -- about 40% of the world;s population. The company will address advertisers' concerns in time, and ad spending will resume. These companies know Facebook remains the best platform for reaching the masses.

Even trading near all-time highs, Facebook stock trades at a forward price-to-earnings ratio of just 25 -- a relative bargain among the tech giants. And there's reason to believe this company can still deliver high growth from here.

One interesting growth avenue is WhatsApp. Facebook recently launched WhatsApp Business which allows businesses to build profiles directly on the platform for easy communication and product display. In a short time period, it's already attracted 50 million people, a testament to its growth potential.

For better or worse, many of the companies thriving right now have stocks that trade at expensive valuation multiples. Mobile-game company Zynga (Nasdaq: ZNGA) appears to be a rare exception. As folks spend more time at home, they're playing more games on their phones. This reality helped the company report record revenue of $452 million for the second quarter of 2020.

Zynga is growing in multiple ways. First, it's acquiring other companies. In July, for example, it acquired a puzzle game called Peak. But Zynga is also growing its audience and engagement. These factors led to the company's 47% year-over-year revenue growth in Q2.

Typically a company growing this fast trades at a very high price-to-sales ratio. Zynga, by contrast, trades around seven times trailing sales. This gives investors a relative bargain for a company that should continue thriving as long as mobile gaming is a thing.

Starbucks (Nasdaq: SBUX) has been a consistent growth stock for decades, but this year is an exception. The COVID-19 pandemic forced locations to close around the world, and this naturally hurt the company's sales. Revenue was down 16% in its fiscal third quarter, and it's expected to be down in the fourth quarter as well.

That said, Starbucks' sales are improving. For example, there were 3,100 locations in the U.S. that never closed. Sales at those stores fell 14% in May, but were already back up 2% in July. The trend suggests the company will recover quickly.

Starbucks has had a rough year, but this is acknowledged in the stock price. It's still down about 25% from previous highs, allowing investors a discounted entry right now.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Square (NYSE: SQ) is a company offering financial technology and services to businesses and individuals. The company calls its business services the "Seller ecosystem," and it's been negatively impacted by the COVID-19 pandemic. Many brick-and-mortar stores aren't doing the sales volume they were pre-pandemic, and that's reflected in Square's results.

However, Square is still serving businesses. It helped move businesses online in the second quarter of 2020, and gross payment volume (GPV) on its online channels increased 50% year over year as a result. Furthermore, it partnered with the federal government with the Paycheck Protection Program, which helped businesses stay afloat.

In time, it's reasonable to expect the Seller ecosystem to resume growth. In the meantime, this weakness is offset by tremendous growth in the Cash App side of Square's business. In Q2, active users surged, sending this segment's gross profit up by 167%. With 30 million active users, Square stock might be worth owning for Cash App alone.

ALSO READ: Is Square the Best Fintech Stock?

General Electric (NYSE: GE) was once one of the biggest companies in the world. Now it trades around $6 per share, having fallen 90% from highs reached around two decades ago. Some investors are tempted by that "bargain" proposition, but here are some reasons you should avoid this stock, at least for now.

In the second quarter of 2020, GE's revenue fell 24% year over year. And the decline was across all of its business segments -- even renewable energy. For the first half of 2020, its poor performance has resulted in a whopping $3.3 billion operating loss.

GE's management expects industrial free cash flow to improve in the second half of the year, and to even be positive in 2021. However, investors shouldn't hold the stock, at least until its business shows real progress towards these goals.

Boeing (NYSE: BA) stock is down over 50% from 52-week highs, and investors smell a bargain. Many expect the stock to bounce back because of the company's business moats. On one hand, it's reasonable. It manufactures airplanes -- one of only two companies doing that at scale. And it's a defense contractor for the government, a very stable customer.

I'm not suggesting Boeing will go under, but consider the following: from July 1999 to July 2019 (a time frame excluding recent problems), Boeing's revenue only increased 54%. Going forward, even bullish Wall Street estimates aren't forecasting robust growth. Rather just a return to normal.

Assuming the company can put the coronavirus and the 737 Max fiasco behind it, I find it unlikely it can grow much faster over the next 20 years than it did in the previous two decades. Therefore, it seems Boeing stock's long-term upside is limited.

Almost everyone is familiar with Fitbit's (NYSE: FIT) fitness trackers. The company enjoys meaningful market share. And its devices collect a lot of fitness data -- data that could be valuable for health research. What's wrong with owning stock in a company like that?

Fitbit has agreed to be acquired by Google for $7.35 per share. Therefore, if the deal goes through, shareholders only have about 13% upside from its current price of $6.50 per share. That's not much.

Of course, there's a chance the deal won't go through. Regulators in the European Union aren't particularly fond of the idea. However, if Fitbit doesn't get acquired, that could be a problem. In the first half of 2020, the company's revenue has fallen 23% from the first half of 2019, and device sales are down 30%. That's resulted in $84 million in losses so far, not an attractive metric for shareholders.

GUSH isn't the ticker symbol for a company, but rather for an exchange-traded fund (ETF). It was created by Direxion and it's the opposite of another ETF called DRIP. Both track the value of the S&P Oil & Gas Exploration & Production Select Industry Index. GUSH gets twice the daily return when the index goes up; DRIP gets twice the return when it goes down.

There's just one problem: GUSH isn't designed to be held, only traded. As Direxion says, GUSH and DRIP "seek daily goals and should not be expected to track the underlying index over periods longer than one day." In fact, over time, both ETFs lose value and are down over 98% since they were created in 2015.

It's possible GUSH could occasionally make a good day trade, but Robinhood investors are buying and holding. That's the best strategy with stocks, but with complicated ETFs like GUSH it's a problem.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Hertz (NYSE: HTZ) has filed for Chapter 11 bankruptcy and investors shouldn't expect the stock to ever recover. Don't believe me? Recently the company thought about raising money by offering new shares, a plan it later pulled. However, in its filing with the Securities and Exchange Commission, it said it didn't expect shareholders to receive a recovery.

Sure, it's theoretically possible for Hertz to recover and the stock to bounce back. But it's a long-shot scenario that not even the company expects will happen. Most likely scenario: Hertz does what it can to satisfy its debt obligations, and its shareholders are left with nothing.

ALSO READ: What Happens to Investors if Hertz Is Delisted?

As you can see, the Robinhood 100 Most Popular is a list containing both winning and losing stocks. Investors, therefore, must be discerning when choosing where to invest their hard-earned money.

The task seems daunting, but it doesn't have to be complicated. Look for well-known companies that are growing revenue, delivering profits, and creating shareholder value. While it's possible a struggling business can recover, turnaround plans are hard to pull off. It's easier to bet a thriving company knows how to win than to bet a floundering company does.

However, this comes with a counterintuitive word of caution. Successful companies frequently come with stocks trading near highs. That's where one should look. New investors tend to invest in stocks that are down in hopes they go back up. But very often, great companies continue to create shareholder value, sending their high stocks even higher over time.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jon Quast owns shares of Square and Starbucks. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Facebook, Fitbit, Square, Starbucks, and Zynga and recommends the following options: short September 2020 $70 puts on Square. The Motley Fool has a disclosure policy.