Most investors probably wouldn’t let a random stranger pick stocks for them. After all, you don’t know if that stranger is qualified to make such a call!
What about a few million people, however? Would you let a crowd of investors come up with a list of prospective picks? Surprisingly (or perhaps not surprisingly), a large-enough crowd will find lots of quality stocks that could be at home in most people’s portfolios.
With that premise in place, here’s a closer look at three of the stocks most commonly owned by customers of no-cost trading platform Robinhood Markets. These investors are not only big fans of blue chips, as it turns out, but they also have the collective knack for ferreting out some the market’s most compelling growth stories. Check them out and see if they work for you and your portfolio as well.
1. Amazon
Amazon (AMZN 0.38%) is the world’s fourth-biggest corporation (as measured by market capitalization), reaching its enormous size by becoming the king of e-commerce. Its reach isn’t as deep overseas, but it accounts for about 40% of the United States’ massive e-commerce market.
The company has become so much more than a place to buy or sell goods online, though. In fact, its biggest moneymaker isn’t e-commerce — it’s cloud computing, which made up more than 60% of last quarter’s operating income after growing its bottom line by 29% year over year.
Given Mordor Intelligence’s annualized growth expectation of more than 16% through 2028 for the global cloud computing market, look for cloud services to become an even more important profit center for Amazon.
That being said, Amazon’s online shopping platform is also changing for the better. The business model is no longer serving as a middleman or online retailer. It is now an advertising platform, generating nearly $12.1 billion worth of ad revenue in the third quarter alone. That’s a 26% year-over-year improvement.
And much more such growth is likely in store. Market researcher Insider Intelligence believes Amazon’s ad business will be 50% bigger than it is now by 2025.
Connect the dots. The company has a lot of different things going on right now, and all of them are bullish.
2. Catalyst Pharmaceuticals
Catalyst Pharmaceuticals (CPRX 4.28%) isn’t as popular among Robinhood’s brokerage customers as Amazon is. It’s not even a household name. It’s one of Robinhood users’ more popular biopharma picks, though, and for good reason.
Catalyst’s drug portfolio doesn’t consist of any blockbusters — drugs driving at least $1 billion in annual sales. But that’s kind of the point. The company’s mission is to “improve the lives of those who suffer from rare diseases, often without any therapeutic options.”
These markets might be relatively small, but they’re also not terribly competitive. With the right scientific know-how, Catalyst can be the big fish in a little pond.
And the strategy is working. Sales are on pace to grow more than 80% this year thanks to the company’s early 2023 acquisition of commercial rights to sell anti-seizure drug Fycompa.
Further boosting sales is the respectable growth of Firdapse, used to treat a neuromuscular autoimmune disorder called Lambert-Eaton myasthenic syndrome (or LEMS). And just last week, Santhera Pharmaceuticals’ Agamree was approved by the Food and Drug Administration as a treatment for Duchenne muscular dystrophy. It matters to Catalyst shareholders because the biopharma now holds the rights to market this drug, too.
None of these indications are multibillion-dollar revenue opportunities. And Catalyst is clearly doing more buying than in-house drug developing; it’s not the usual biopharma business model.
It’s a lower-risk/high-reward approach that works for the company, though, and its shareholders. There is added value by virtue of its expertise and experience in the underserved rare-disease therapy market.
3. Adobe
Lastly, add technology name Adobe (ADBE 0.89%) to your list of popular stocks among Robinhood’s customers you might want to scoop up for yourself.
You likely know the company as the name behind the digital image-editing software Photoshop, or its PDF file management tools. Adobe still offers and updates both, but what’s dramatically changed is how it sells these solutions.
Although this software can still be purchased on a one-time basis, most of its customers now choose the subscription versions of these tools. This cloud-based software is not only portable, but always up-to-date with the latest features and fixes.
To this end, Adobe is now doing $14.6 billion worth of annualized recurring revenue. That’s roughly 80% of its total yearly top line now being collected like clockwork.
That being said, it’s worth noting that Adobe is so much more than PDFs and Photoshop these days. It offers a robust suite of services that most enterprises need.
For instance, its Creative Cloud platform allows users to generate images from scratch using artificial intelligence, make audio recordings, create animations, and access a large library of stock images from one single suite.
Its Experience Cloud takes aim at a slightly different sliver of the enterprise market. Companies looking to build dynamic websites, collect digital customer information, manage marketing campaigns, and more will find Adobe has something to offer.
The subscription-based model’s recurring revenue typically grows at a relatively slow pace. It increases at a consistent pace even in challenging conditions, however, since access to these software suites is difficult to give up once employees begin using them. That’s a big reason Adobe shares have held up so well of late when most other stocks haven’t.
