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? At the moment, Delta Air Lines (DAL), Exxon Mobil (XOM) and JPMorgan Chase (JPM) 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. The market overall has been choppy since then, with bear market rallies often being undercut by painful drawdowns. The S&P 500, the Nasdaq and the Dow Jones Industrial Average have all rebounded. The bullish action continued when stocks rallied following the latest Fed meeting and the Nasdaq is now in the midst of a power trend. But don’t be surprised to see a market pullback after the big gains in recent weeks.
The stock market is now back in a confirmed uptrend. With earnings season in full flow, investors should raise exposure at a measured pace. A confirmed uptrend is when investors should make most stock purchases. It’s also a good time to add to existing holdings at follow-on opportunities, such as support at the 50-day moving average or at the 10-week moving average.
It remains crucial to stay on top of sell signals. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving averages.
A good way to stay engaged is to build up one’s watchlist of potentially actionable stocks. Focus on fundamentally strong stocks coming out of sound chart patterns, such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks 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 Delta Air Lines stock, Exxon stock and JPMorgan Chase stock in more detail. An important consideration is that these stocks are solid from a fundamentals 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.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Delta Air Lines Stock
DAL stock is trading near a cup-with-handle base buy point of 39.72, MarketSmith analysis shows. The 5% buy zone from its latest entry stretches up to 41.70. Investors could also use 40.44 as an alternate handle entry
The relative strength line has been moving sideways of late but remains close to recent highs.
It is continuing to hold above its 50-day moving average, which itself recently mounted the longer-term 200-day moving average. This is a bullish technical maneuver known as the ‘golden cross.’
DAL stock currently holds a near-perfect IBD Composite Rating of 98. There are some fundamental tailwinds, with the company expecting strong growth in 2023 as the travel market recovery continues.
Airline travel rebounded in 2022 despite some harsh weather and technology disruptions during the holiday season. This is expected to carry over to this year, with the World Economic Forum predicting North American airlines will fully recover their pre-pandemic ridership levels by the end 2023.
For fiscal 2023, Delta forecasts “significant” earnings growth to $5 to $6 per share, from $3.20 in 2022. Revenue is seen rising 15% to 20%, to a range of $52.44 billion to $54.72 billion. This was more bullish than Wall Street had hoped for. Analysts had expected 64% earnings growth to $5.26 per share on $53.49 billion in revenue.
It was not all sunshine and rainbows though. Delta warned non-fuel-unit costs and labor costs would increase during the first quarter. Delta guided Q1 earnings to a range of 15 cents to 40 cents per share, vs. Wall Street predictions of 59 cents.
Signs of recovery are already clear. When the firm posted its most recent earnings report, it crushed expectations. Earnings soared 573% to $1.48 per share, and revenue jumped 42% to $13.44 billion. This was clear of analyst estimates.
It also marked three quarters of earnings growth and six straight quarters of sales growth.
“The industry backdrop for air travel remains favorable, and Delta is well-positioned to deliver significant earnings and cash-flow growth,” Delta CEO Ed Bastian said during the company’s Q4 earnings results on Jan. 13.
Exxon Mobil stock is in a buy zone after clearing a flat base buy point of 114.76.
Investors could have used its retaking of the 50-day moving average as an early entry. The relative strength line is near highs.
XOM stock has a strong IBD Composite Rating of 90 out of 99. Stock market performance is bullish, with the stock rising about 80% in 2022.
Oil prices surged as the West turns away from Russian supply, topping $130 a barrel. But they have now fallen back to just below the $79 mark.
Exxon Mobil recently reported EPS grew 66% to $3.40 in Q4 while revenue shot up 12% to $95.43. In 2022, Exxon Mobil earnings skyrocketed 160% to $14.06 per share. Sales edged up 45% to $413.68 billion.
Exxon Mobil CEO Darren Woods said in a statement that the company “clearly benefited from a favorable market” in 2022.
“Our plan for 2023 calls for further progress on our strategic objectives, which include leading the industry in safety, operating, and financial performance,” Woods said.
Irving, Texas-based Exxon is diversified across much of the oil and gas spectrum. Operations range from exploration and production of crude oil and natural gas to refining and marketing fuels and petrochemicals. Exxon is one of the largest publicly traded companies in the energy sector.
Exxon Mobil previously announced its five-year corporate plan in early December, reporting it expects to maintain its annual capital expenditures at $20 billion to $25 billion through 2027. The oil giant is also planning to increase its share buyback program to $50 billion through 2024.
Investors will also have an eye on the company’s cash balance. Exxon reported $29.7 billion at the end of Q4, after having $30.4 billion at the end of Q3, up almost 350% over the $6.8 billion reported at the start of the year.
Along with keeping its annual capital expenditures level through 2027, Exxon Mobil also plans to grow its carbon emissions-cutting investments to around $17 billion through the same period. This represents nearly a 15% increase from current levels. Exxon’s capital investments in 2023 will be in the range of $23 billion-$25 billion.
What To Do As Market Rally Faces Tests
JPMorgan Chase Stock
JPM stock is in a buy zone after previously clearing a flat base buy point of 138.76. This is the stock’s first breakout in more than a year. The current buy zone extends to 145.69.
The relative strength line remains at around highs, an encouraging sign. The stock is pulling away from the 10-week moving average.
The latest pattern comes within a larger cup base with a higher entry point of 173.06.
Overall performance is excellent, which is reflected in its very strong IBD Composite Rating of 95. Both earnings and stock market performance are solid.
One reason JPM stock is a one of the best Robinhood stocks to buy or watch now is the fact it has got over the hurdle of earnings.
It recently posted Q4 results. JPMorgan earnings rose 7% to $3.57 per share and reported revenue grew 18% to $34.5 billion. Net interest income also spiked 48% to $20.3 billion, exceeding forecasts of 39% growth to $19.1 billion and marking the fifth straight quarterly gain.
Analysts had predicted JPMorgan earnings would slide 6.3% to $3.12 per share on 17.5% revenue growth to $34.3 billion, according to FactSet.
Consumer banking revenue increased 29% to $15.8 billion and just beat estimates of $15.6 billion. Meanwhile, JPMorgan’s consumer and investment banking revenue dipped 9% to $10.5 billion, coming in lower than the expected $10.8 billion.
Morningstar analyst Eric Compton is rating the stock as a hold with a 146 target. He said “2023 outlook is good” for the company.
“With leading investment bank, commercial bank, credit card, retail bank, and asset and wealth management franchises, JPMorgan is truly a force to be reckoned with,” he said in a note to clients. “The bank’s combination of scale, diversification, and sound risk management seems like a simple path to competitive advantage, but few other firms have been able to execute a similar strategy.”
He also said the firm has “managed to seemingly put all the pieces together in a more cohesive and less error prone way than peers.”
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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