Top Stocks on Robinhood: What to Buy or Monitor

Investing in stocks can seem straightforward, but choosing the right ones at the right time without a solid strategy is a challenging task. So, which are the top stocks on Robinhood to consider buying or keeping an eye on? Currently, Microsoft (MSFT), Netflix (NFLX), and Amazon (AMZN) stand out as strong performers, providing a blend of solid fundamentals and technical strength. Unlike meme stocks like GameStop (GME) and AMC Entertainment (AMC), these stocks exhibit a mix of stability in both fundamental and technical aspects.

Key Considerations for Top Robinhood Stocks
With thousands of stocks trading on the NYSE and Nasdaq, identifying the ones with the potential for substantial gains requires careful consideration. The best Robinhood stocks for investors are those offering a combination of robust earnings and a strong stock market performance.

The CAN SLIM system provides clear criteria for selecting stocks. It emphasizes investing in stocks with recent quarterly and annual earnings growth of at least 25%. Additionally, look for companies with innovative products or services and consider not-yet-profitable firms, particularly recent IPOs, showing significant revenue growth.

The Market’s Role in Robinhood Stock Selection
The CAN SLIM formula highlights the importance of the market (M) factor. Most stocks, even strong ones, tend to follow the market direction. It is advisable to invest when the stock market is in a confirmed uptrend and move to a cash position during market corrections. Currently, with indexes near recent highs and the Nasdaq and S&P 500 above the key 50-day moving average, the stock market appears to be in a confirmed uptrend.

While the market is back in an uptrend, vigilance is crucial, and investors should stay attuned to sell signals. Any stock dropping 7% or 8% from the purchase price should be considered for removal from the portfolio. Additionally, be cautious about sharp breaks below the 50-day or 10-week moving averages.

External factors, such as inflation concerns and geopolitical uncertainties like the Russia-Ukraine conflict and issues in Israel, introduce headline risk. Market conditions can swiftly change, so it’s essential to monitor the market trend regularly.

Top Robinhood Stocks to Consider
Now, let’s delve into a detailed analysis of Microsoft stock, Netflix stock, and Amazon stock. These stocks not only exhibit strong fundamentals but also boast significant institutional ownership, earning them a spot among the top 100 stocks on the Robinhood platform, favored by traders.

Microsoft Stock (MSFT)
MSFT stock is currently in a buy zone, having cleared a second-stage flat base with an ideal entry point of 384.30, as per MarketSmith analysis. It consolidated after struggling to gain traction above a cup base buy point of 366.78. Microsoft’s stock is gaining momentum after trading tightly for several weeks, rebounding from the 10-week line and overcoming resistance for early entry opportunities.

Support has been evident just below the 21-day exponential moving average, with the 50-day line continuing to trend upward. While the relative strength line retreated from its highs, it is again moving higher, positioning Microsoft stock in the top 9% for price performance over the last 12 months.

Microsoft boasts an impressive IBD Composite Rating of 97 out of 99, reflecting its robust earnings growth. With an average EPS growth of 19% over the past three quarters and a 16% growth over the past three years, Microsoft remains a large firm with substantial growth. Recent earnings per share of $2.99 and revenue of $56.5 billion for the quarter ending Sept. 30 underscore its strong financials.

The company’s foray into artificial intelligence is evident through initiatives like the Azure Maia AI Accelerator. Microsoft’s commitment to AI extends to its OpenAI investment and integration of AI tools into popular Office productivity applications.

Netflix Stock (NFLX)
NFLX stock has re-entered a buy range by surpassing a cup-with-handle base’s ideal entry point of 482.70. Holding above major and short-term moving averages, investors are watching for momentum in the relative strength line.

Analysts anticipate a 23% earnings jump for Netflix in 2023, followed by a further 30% increase in 2024. NFLX stock boasts a Composite Rating of 91, reflecting strong performance in both earnings and stock market metrics. Accelerated earnings over the past three quarters contribute to this positive rating.

While Netflix faces fierce streaming competition from platforms like Amazon Prime Video, Apple TV+, Disney+, Hulu, Warner Bros. Discovery’s Max, Comcast-owned Peacock, and Paramount Global’s Paramount+, it remains a dominant player. Netflix’s original content push, featuring popular shows like “Stranger Things,” “Bridgerton,” “Ozark,” and “The Witcher,” adds to its appeal.

An interesting development is Netflix’s ad-supported subscription tier, gaining over 23 million monthly active users. Despite competition, the company is rapidly growing in this segment. However, caution is advised as earnings announcements for the fourth quarter are approaching on Jan. 23.

Amazon Stock (AMZN)
AMZN stock, a mega-cap, has extended beyond the buy zone of a cup base with an ideal entry point of 145.86. While currently not within the optimal entry point, it remains actionable from the Nov. 27 high of 149.26, serving as an alternate entry. The stock rebounded after finding support at the 50-day and 10-week moving averages, positioning it just 4.1% above the 10-week line.

Boasting a robust Composite Rating of 92 out of 99, AMZN stock is in the top 9% for price performance over the past 12 months. For the quarter ending in September, Amazon reported a significant EPS growth of 236% to 94 cents, with revenue climbing 13% year over year to $143.1 billion. Despite missing analysts’ expectations for Amazon Web Services Cloud business sales, the company remains optimistic about its fourth-quarter sales outlook.

CEO Andy Jassy highlighted growth in generative AI products and emphasized the strong pace of new deals signed. Amazon’s investments in AI, including a $4 billion deal with Anthropic, position it well in the evolving technology landscape.

In Conclusion
When considering stocks on Robinhood, careful analysis of both fundamental and technical aspects is crucial. Microsoft, Netflix, and Amazon emerge as strong contenders, demonstrating solid financials and significant institutional support. However, market conditions can change rapidly, and investors should remain vigilant to capitalize on opportunities while managing risks effectively.