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Buying a stock is deceptively easy, but purchasing the right stock at the right time without a proven strategy is incredibly hard. So, what are the best Robinhood stocks to buy now or put on a watchlist?
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At the moment, Berkshire Hathaway (BRKB), Johnson & Johnson (JNJ) and Delta Air Lines (DAL) are standout performers, at least relatively. Unlike misfiring meme stocks such as GameStop (GME) and AMC Entertainment (AMC), these stocks offer a mix of solid fundamental and technical performance.
Best Robinhood Stocks To Buy: The Crucial Ingredients
There are thousands of stocks trading on the NYSE and Nasdaq. But to generate big gains you have to find the very best. The best Robinhood stocks for investors will be those that offer a mix of earnings and stock market performance.
The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.
The Market Is Key When Buying Robinhood Stocks
A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.
A stock market rally that kicked off 2022 soon fell on its face. Another attempt to rally has just fallen flat, resulting in a return to market in correction status. The S&P 500, the Nasdaq and the Dow Jones Industrial Average could soon test 52-week lows once again.
With the market back in a correction investors should avoid buying stocks altogether. Investors must start raising cash. You should be entirely off margin.
Investors should remain engaged though, and now is a good time to look for quality stocks too add to one’s watchlist. Candidates include those in the IBD 50. These will tend to have rising relative strength lines. The names below are good candidates.
Remember, there is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.
Things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.
Best Robinhood Stocks To Buy Or Watch
Now let’s look at Berkshire Hathaway stock, Johnson & Johnson stock and Exxon Mobil stock in more detail. An important consideration is that these stocks are solid from a fundamental perspective, while institutional ownership is also strong. They are also part of the Robinhood Top 100 Stocks, the platform’s most popular stocks among traders.
Berkshire Hathaway Stock
The ultimate Warren Buffett stock is one to watch for now as it seeks support near its 200-day moving average. If they can rebound from here and pass the 50-day line it could offer a buying opportunity. But Berkshire stock has retreated to the 2022 lows.
BRKB stock’s relative strength line has edged lower over the past two months, but is still close to a 52-week high.
BRKB stock has seen its IBD Composite Rating shoot up to a solid 76 out of 99. Unlike many stocks, Berkshire Hathaway stock is holding strong so far in 2022 with just a slight decline.
It boasts a good mix of stock market and earnings performance. EPS has been picking up following the Covid pandemic, accelerating by an average of 27% over the past three quarters.
Berkshire Hathaway is a conglomerate that owns some of America’s most famous firms. It wholly owns the likes of Geico, Duracell, Dairy Queen, Fruit of the Loom and railroad operator BNSF.
Berkshire Hathaway is perhaps more famous for serving as an investment vehicle for Warren Buffett and his top lieutenant, Charlie Munger. Following their value investing philosophy, the company owns huge stakes in American Express (AXP), Coca-Cola (KO) and other heavy hitters.
Under investment managers Todd Combs and Ted Weschler, Berkshire Hathaway has been increasingly sinking money into tech. It’s taken large positions in established giants like Apple (AAPL), as well as younger companies like Brazilian payments company StoneCo (STNE) and software firm Snowflake (SNOW). Berkshire also snapped up a stake in Amazon.com (AMZN).
In the first quarter of 2022, Berkshire Hathaway significantly increased its Chevron bet. The company’s Q1 report April 30 showed that its stake jumped in value to $25.9 billion from $4.5 billion at the end of 2021. Berkshire also added to Activision Blizzard (ATVI) and Apple in Q1 while purchasing a big stake in Occidental Petroleum (OXY).
But Berkshire Hathaway stock itself has been one of the firm’s favorite investments of late.
The roughly $27 billion it spent on repurchases last year were up from the then-record $24.7 billion in repurchases it spent in 2020.
One of the biggest questions around the future of Berkshire Hathaway in recent years was who would take over the mantle of CEO from Buffett.
The Oracle of Omaha has finally given the answer. He said Greg Abel, who runs the noninsurance businesses, will take over in his stead.
CFRA analyst Catherine Seifert, who rates the stock as a hold with a 355 target, sees some mixed fortunes ahead for the firm.
“We expect some near-term weakness at GEICO to be offset by an acceleration in growth at Berkshire’s reinsurance units,” she said in a We see acquisitions and/or share buybacks remaining part of Berkshire’s capital allocation strategy, given the $106 billion in cash and short-term investments on hand as at March 31, 2022.”
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Johnson & Johnson Stock
JNJ stock has formed a flat base with an ideal entry of 186.79. It comes after shares broke out of a double-bottom base with a buy point at 173.72 on March 14. Johnson & Johnson stock has fallen back below the double-bottom buy point and the 50-day line.
Shares have been finding support at the 200-day line. Progressing from here and retaking the 50-moving average is key going forward. That could offer an early entry, or passing the late May short-term high of 181.74.
The relative strength line sits just off levels last seen in late 2020. Strong all-around performance has netted it an IBD Composite Rating of 90 out of 99.
JNJ stock was boosted after the firm beat analyst earnings views for Q1. EPS rose 3% to $2.67 while analysts forecast $2.55 per share. Sales of $23.43 billion missed estimates though.
During its first-quarter report, Johnson & Johnson trimmed its full-year outlook for 2022. The firm expects to earn $10.15-$10.35 per share on $94.8 billion to $95.8 billion in sales.
For the year, JNJ stock analysts call for adjusted profit of $10.55 per share on $99.63 billion in sales. Both measures would climb less than 10% year over year.
JNJ is moving to separate its consumer health division into a new company. This will allow J&J to focus on high-growth products, including its drugs and medical devices. In 2021, those units generated more than $79 billion in sales. This more focused approach could lead to bigger gains in the future.
The company’s fundamentals are improving, and litigation risk is starting to lessen.
Last year, Johnson & Johnson brought in $93.78 billion in sales, popping close to 14%. The company also reported adjusted profit of $9.80 per share, surging 22%.
Meanwhile, Johnson & Johnson is now emerging from under a cloud of legal woes.
Earlier this year, the company agreed to pay $5 billion to settle claims it contributed to the opioid crisis in the U.S. Drug distributors AmerisourceBergen (ABC), Cardinal Health (CAH) and McKesson (MCK) will pay $21 billion.
Further, Johnson & Johnson added another $99 million settlement in West Virginia in April.
J&J also recently spun out its talcum powder business following claims its compound led people to develop cancer. Then, the new company immediately filed for bankruptcy. Before that, J&J pulled its baby powder brand from shelves in the U.S. and Canada.
What To Do As Risk Of Recession Grows
Delta Stock
At the moment, 46.37 may serve as the best buy point, though it needs to retake its major moving averages first.
The recent consolidation since late April is long enough to be a proper base on a weekly chart. More broadly, the 45-46 area has acted as resistance several times over the past year.
DAL stock reclaimed its 50-day and 200-day lines in late May, as JetBlue (JBLU) and Southwest Airlines (LUV) lifted forecast with bullish forecasts on second-quarter revenue. That followed similar guidance from United Airlines (UAL).
A few days later, Delta Air Lines and a few other carriers gave upbeat Q2 revenue outlooks, but airline stocks have been significant losers in the past couple of weeks. Delta stock fell back below its 50-day and 200-day lines.
Delta has said it would cut flights this summer amid staffing issues And airlines are dealing with rising fuel costs as Russia’s war in Ukraine continues.
Investors will want to see some improvement in DAL stock before taking the plunge. At the moment its Composite Rating is far from ideal.
There has been a split in stock market and earnings performance. While the stock has soared earnings remain in the dumps due to the Covid pandemic.
The stock is actually positive so far in 2022 even as earnings have shrunk on average over the prior three quarters. They did pop by 65% in the most recent quarter though, and are expected to continue to rebound.
The airline said that the service issues it was facing — be it short staffing, weather or Covid — had led to historic disruptions.
“More than any time in our history, the various factors currently impacting our operation — weather and air traffic control, vendor staffing, increased COVID case rates contributing to higher-than-planned unscheduled absences in some work groups — are resulting in an operation that isn’t consistently up to the standards Delta has set for the industry in recent years,” Allison Ausband, Delta’s chief customer experience officer, said in a statement.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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