This is a crazy year for the investment community. Although volatility has always been present in the stock market, we have witnessed steep bear market declines in history in the first month, as well as the most fierce rebound in new highs from the low bear market. You can rightly say that 2020 tried to solve investors unlike before.
But it is especially a test for millennial or novice investors who may not have navigated through the bear market before.
Robinhood online investing app has gained millions of new members this year, with an average age of 31 of its users. Although the platform leaderboard (i.e., the list of most held stocks) features a few well-known and time-tested companies, millennial and novice investors are also drawn to their fair share of awful company.
However, investing should not be complicated for Robinhood investors. They just need to change their game plan to reflect their investments in terms of years, rather than days, weeks, or months. The following four stocks are great companies that Robinhood investors can confidently buy and hold for five years or longer.
What is an easy way to motivate young people to invest? Let them buy from a high-growth company that many can relate to: Pinterest (NYSE: PINS).
The up-and-coming comer of social media Pinterest has not run on the same growth issues that hurt other unnamed platforms Facebook. In the last quarter of June, Pinterest saw its monthly active membership increase by 116 million (39%) last year to 416 million, with most users located outside the United States. The bad news is that the average revenue per user outside the US is greater than the ARPU within the US. a big reason it can deliver sustainable growth double sales going forward.
Pinterest is also a huge e-commerce opportunity. You can think of Pinterest as a fun place to pin products, services, or places you enjoy. Pinterest sees these pinned boards as a perfect opportunity to connect compelling consumers with small businesses that specialize in their interests.
Look for Pinterest that could be the leading social media company of the decade.
The Robinhood leader shows that its members are attracted to companies researching a coronavirus vaccine. I’m not a big fan of chasing what could be a crowded and unpredictable space. Instead, I suggest that Robinhood investors buy into a proven, high-growth biotech stock like Exelixis (NASDAQ: EXEL).
Exelixis is a cancer drug manufacturer that mainly rides Cabometyx coattails in large growth. Cabometyx failed prostate cancer tests in 2014, but ultimately proved to successfully address this key point in the treatment of primary and secondary lines of kidney cell cancer and hepatocellular carcinoma. These hints should add up to more than $ 1 billion in maximum annual sales.
But Exelixis is not done there. With an abundance of cash flowing from its operations each year, the company heads the internal research segment. It also has six dozen ongoing clinical studies examining Cabometyx as a monotherapy or combination therapy. This includes the phase 3 study that found Cabometyx and Bristol Myers SquibbOpdivo immunotherapy operates circles in the previous standard-of-care Sutent in the first-line RCC.
Exelixis will make money in the coming year, all while enjoying double digit growth potential from Cabometyx.
Millennial investors are also fans of investing in marijuana stocks. While there are plenty of great U.S. pot stock to choose from, Robinhood members can’t buy over-the-counter trading companies. So, instead of focusing on direct players, high-growth supplement companies GrowGeneration (NASDAQ: GRWG) looks like a smart buy-and-hold.
GrowGeneration currently has 28 stores open in 10 states, and is responsible for providing an assortment of hydroponic solutions, as well as lighting, soil, and nutrition to growers. In the 34 states that have been given the green light on medical marijuana in the US, there are many opportunities for growers to improve yields and lower production costs. GrowGen aims to have 50 retail locations open by the end of next year.
What has been impressive for GrowGeneration is how many different ways it can expand its top line. We have witnessed robust organic growth from existing locations. The company has also made nearly a dozen acquisitions since 2014 to expand its product portfolio and reach. The company also launched a private label program to improve repeat business and strengthen its margins.
Everyone knows that direct players in the pottery industry are growing like weeds, but GrowGen has shown that it can keep up with multistate operators in the sales growth department.
Probably not a more consistent double digit growth this decade than cybersecurity. In the novel coronavirus completely redesign of the traditional office environment, more employees than ever before work remotely. This means a growing emphasis on storing data in the cloud, as well as protecting that data.
The cybersecurity company that Robinhood investors should consider buying and handling at least the next five years Okta (NASDAQ: OCT). This company offers a diverse portfolio of identity verification solutions that rely on artificial intelligence to become smarter over time. Okta’s product portfolio is designed to grow with its clients – which, as they expand, are more likely to add to new protections. Having existing clients spend more is Okta’s plan for expanding the margin.
Moreover, most of Okta’s revenue – 95%, to be exact – comes from subscriptions. Subscription revenue tends to be high margin, and this reduces the chances of the customer churning. In the last quarter of July, Okta’s gross margin came in at a healthy 74.5%, higher than 210 basis points from last year.
Okta is not a cheap stock in any way, but it provides a basic service need in today’s growing digital economy. That suggests further upside down.