Although memes and trading apps seemingly dominate business media throughout the new normal, it’s time to give undervalued Robinhood stocks to buy now a chance to shine.
While people may be familiar with Robinhood (NASDAQ:HOOD) as either an investment platform or its own publicly traded opportunity, the brand is also a pop-culture icon. Many folks turn to the top 100 most popular securities offered on the Robinhood platform to guide their decisions.
Some of these names, like Microsoft (NASDAQ:MSFT), represent long-term ideas with a high probability of success. Other names evoke speculation, such as the incredibly risky ContextLogic (NASDAQ:WISH). But which of these names represent the most compelling undervalued Robinhood stocks to buy now?
To attempt to answer this question, I relied on GuruFocus.com’s valuation indicator to help identify interesting candidates. Additionally, I deliberately stayed away from undervalued Robinhood stocks to buy now that I happened to own. I wanted to keep this list as objective as possible, meaning that some of these ideas might not fit my particular taste.
With these caveats in mind, let’s dive into the undervalued Robinhood stocks to buy now.
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With the huge hits that the technology sector absorbed this year, Amazon (NASDAQ:AMZN) might not seem a wise idea. Mainly, its core online marketplace business faces significant risks. For one thing, despite improvements in the inflation rate, consumer prices represent a massive spike against historical levels. However, it’s e-commerce sales as a percentage of total retail sales that offers a sharp warning.
Since peaking at 16.4% in the second quarter of 2020, e-commerce’s share of the total retail pie continues to decline. For the latest read (Q1 2022), the metric stands at 14.3%. Further, with people desiring experiences over buying physical goods – the revenge travel phenomenon – Amazon appears to be treading difficult waters.
Because of this and other challenges, GuruFocus.com pings AMZN as modestly undervalued. One factor to consider is Amazon’s forward rate of return, which at 20.5% is much higher than the industry median of 12.1%. Plus, the company’s myriad other business units – ranging from cloud computing to content distribution – makes AMZN one of the undervalued Robinhood stocks to buy now.
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Initially, when Covid-19 upturned the basis of American society, many analysts feared the worst for Starbucks (NASDAQ:SBUX). As one Medium.com post mentioned back in August 2020, mass-scale telecommuting threatens the hidden trillion-dollar office economy. Essentially, popular hubs like Starbucks depend on white-collar workers returning to the office.
So far, though, Starbucks has disproven this theory, at least to where it targets the famous coffee brand. After suffering a hit in its fiscal 2020 sales, in 2021, the company generated $29 billion on the top line. This tally was almost 10% higher than its fiscal 2019 result. Further, the current trailing-12-month revenue stands at nearly $32 billion, blowing the doors off prior sales performance.
Still, even with all that good stuff, GuruFocus.com identifies SBUX as one of the undervalued Robinhood stocks to buy. Aside from its tremendous growth metrics, Starbucks also brings to the table excellent profitability figures. In addition, the company’s earnings yield – which analysts use to determine optimal asset allocations – is 4.8%. This is notably higher than the industry median of nearly 3%.
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Digital payments specialist PayPal (NASDAQ:PYPL) epitomizes the give-and-take effect of the Covid-19 crisis. Back when the pandemic breached our borders, investors piled into PYPL shares. Because the company fostered contactless transactions, the platform enabled the economy to keep moving.
However, people quickly got sick and tired of mandates and mitigation measures. In turn, PYPL stock also suffered. Since the start of this year, shares have slipped 48%.
To be fair, other headwinds – mainly competition related – impose worries on the business. However, I believe this matter may be exaggerated somewhat. For instance, in 2021, PayPal had 426 million users who transacted at least once in the year. In contrast, rival Stripe has 3.1 million websites using the platform and has a valuation of $94.4 billion. However, PayPal’s market capitalization is nearly $117 billion.
Therefore, the familiarity angle should benefit PYPL. Also, GuruFocus.com considers PayPal to be one of the significantly undervalued Robinhood stocks to buy.
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Based on the headlines, the idea of wagering on Netflix (NASDAQ:NFLX) may seem unnecessarily risky amid the Disney (NYSE:DIS) onslaught. Heading into the Magic Kingdom’s second-quarter earnings report, all eyes focused on the company’s streaming unit, Disney+. Mickey and Company delivered the goods, leading to a total subscriber count of 221 million, thus outpacing Netflix.
While that might sound like the death knell for NFLX, investors ought to consider one key detail. Per Variety, in the domestic streaming market, “Disney+ generated about 39% as much revenue per subscriber as Netflix for the second calendar quarter, a measure referred to in the finance world as ARPU (average revenue per user).”
Further, the international comparison fared worse. Therefore, investors shouldn’t write NFLX’s obituary just yet. While it may be frustrating to deal with Netflix bears all of a sudden, the negativity does contribute to NFLX being one of the undervalued Robinhood stocks to buy now.
Indeed, shares could be significantly undervalued. The company’s forward rate of return is 19.1%, well above the 7.1% industry median.
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Amid the rising inflation that crimps household savings and broader consumer sentiment, Uber (NYSE:UBER) presents a tough case. Not signing up for ride-hailing services is one of the easier discretionary budget items to axe. The same thought process applies to Uber Eats, the company’s food-delivery service arm.
At the same time, the revenge travel phenomenon appears to be going strong. Further, the latest downtick in the consumer price index (from 9.1% in June to 8.5% in July) suggests that travel sentiment could last a bit longer than expected. Therefore, it’s not out of the question for UBER to swing higher based on broader fundamentals.
Also, as people return to the office, Uber Eats should rise. That’s because worker bees will likely return to ordering food to their offices and cubicles.
To be fair, though, UBER pings as a possible value trap. Therefore, think carefully before engaging what could be one of the undervalued Robinhood stocks to buy.
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One of the trickiest narratives to decipher among undervalued Robinhood stocks to buy now, Alibaba (NYSE:BABA) treads water awkwardly. To be sure, BABA remains a popular investment idea among young traders. At the same time, relations between the U.S. and China seemingly slumped to new lows.
Just recently, Reuters reported that five Chinese public firms (mostly related to energy) will voluntary delist from U.S. exchanges. While the issue doesn’t directly relate to Alibaba, the geopolitical tensions and brewing mistrust certainly do.
However, if you can stomach the international vagaries, GuruFocus.com pings BABA as significantly undervalued. Mainly, its forward price-earnings ratio of 11.8x tis better than the industry median of 15.3x.
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Given the steep losses that Carnival (NYSE:CCL) and the cruise-ship industry suffered, it might not be terribly surprising that it’s also potentially one of the undervalued Robinhood stocks to buy now. To be clear, I personally think CCL is risky. Basically, the devastation affecting the business will likely take many years to resolve.
Further, investors may need to brace for possibly another health crisis. As you’ve probably heard, monkeypox cases increased over the past several days.
Nevertheless, GuruFocus.com pings CCL as a modestly undervalued investment. One main factor to consider is the forward P/E ratio of 12.6x, which is below the industry median of 20x. Also, Carnival’s forward rate of return is 32.7%, well above the travel industry’s median of 2.3%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.