3 Robinhood Favs Worth Buying on the Dip
With the wind seemingly at the market's back, these are three Robinhood favs that look like strong momentum plays.
At the surface January 2022 looks like a forgettable month for the stock market. Yet it may eventually be remembered as one of the biggest "buy the dip' opportunities for investors.
Thankfully, the fast plunge into correction territory that jolted equity investors has stabilized in recent days. With the support of fourth quarter earnings reports and mostly positive economic data, stock prices are springing back as quickly as they dropped. The impressive rebound has coincided with an uptick in trading volume, a good omen for a sustainable rally.
Robinhood traders in particular have emerged from their winter slumber to bid up their favorite names. Many have bounced nicely but remain well off their previous highs. With the wind seemingly at the market's back, these are three Robinhood favs that look like strong momentum plays.
Is Microsoft Stock a Buy?
After home-run swing Sundial Growers, Microsoft (NASDAQ: MSFT) is the most popular stock among Robinhooders. Although its P/E ratio wasn't as exuberant as most technology mega-caps, it got swept away with the market tide to the tune of a 20% pullback from its December 2021 peak.
A high volume recovery is underway for the perennial software winner and barring another leg down in the correction, a return to record levels appears imminent. The stock price has regained both its 200-day and 50-day moving average lines which are bullish moves for both the long- and short-term. Favorable crossovers in the MACD and Bollinger Band indicators also paint a bright technical picture.
Microsoft's fundamentals look solid as usual too. The company just reported a strong fourth quarter that flashed broad-based 20% revenue growth and a 22% jump in profits. The Azure and cloud services business was once again the lead horse as enterprises worldwide continue to embark on their digital transformations.
The strong finish to the year has Wall Street raising this year's earnings estimates and price targets. With a perfect 26 out of 26 analysts calling the stock a buy this year, Robinhood traders should feel as comfortable as ever adding on the dip.
Will Snap Stock Recover?
Right on Microsoft's heels, Snap (NYSE: SNAP) is currently the third most popular holding on the Robinhood platform. Despite the stock's steep drop from its September 2021 peak of around $83, traders have been hanging on in hopes of a rebound of equal magnitude.
Shares of the social media app operator have shown signs of life in recent days following a brutal 11-day losing streak. Daily volume is starting to trend above the 90-day average and bullish RSI, MACD, and Bollinger Band moves suggest a plausible rebound is afoot. A larger volume spike, however, would lend credence to a longer run for a stock that has struggled to impress the market (despite its Robinhood prowess).
Snap's last quarterly report showed a 57% rise in revenue to more than $1 billion but the market was expecting a little better. Yet combined with a swing to profitability and a 23% increase in daily active users, the quarter deserved more credit.
Instead, the market remained stubbornly concerned about Snap's limited focus on the sub-35 year old demographic and sole dependency on advertising revenues. Changes to Apple's privacy settings prompted the stock's most recent freefall, one it has yet to recover from.
Snap is said to be addressing the Apple ad-tracking issues and said it expects advertising revenue growth to be just fine over the long haul. It's a hard stock to trade in the short term, but with the valuation well below its peer group average, it's a good time for long-term investors to snap up some shares.
Is it a Good Time to Buy Walmart Stock?
Despite being a defensive stock, Walmart (NYSE: WMT) got dragged down with the rest of the market last month. The top 10 Robinhood fav slipped to its lowest level since March 2021 creating a glorious add-on opportunity for a company worthy of being a portfolio cornerstone.
Like other retailers, even Walmart has been impacted by supply chain disruptions and inflation. Rising wage expenses are further denting margins of late. But the company is adapting well by boosting inventory and marking down prices by less to combat the near-term pressures. These aren't issues Walmart hasn't faced before, so expect the company and the stock to recover just fine.
Management raised its outlook for 2022 comparable store sales growth to 5% (ex-fuel). This is no small feat in today's retail environment. In the meantime, investors have the all-important holiday quarter result to look forward to on February 16th.
Analysts are forecasting EPS of $1.49 but more analysts see upside to this figure than do downside. A comfortable Q4 beat could spark the next leg in the recovery rally and put the wind at Walmart's back heading into fiscal '22.
Walmart is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
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