It was a crazy year that the investment community will not soon forget. Within an approximately six-month stretch, the wide base S&P 500 lost more than a third of its value and regained everything. It was the fastest bear market decline in history, followed by the fastest rally to new highs from a low bear market.
Particularly interesting about the increased instability during the coronavirus disease pandemic 2019 (COVID-19) is how it brings millennial and novice investors out of carpentry and the stock market.
The online investing app Robinhood, best known for its no-commission deals, equity investments and free shares of gifts to new users, has increased its membership by millions this year. The average age of millions of Robinhood account holders is only 31 years.
On the one hand, putting money to work in the stock market at an early age is fantastic. As the wider market and high-quality businesses tend to increase in value over time, the potential for increasing wealth is very beneficial to young investors.
On the other hand, the Robinhood platform has not done a very good job of providing millennials and novice investors with the tools they will need to succeed in the long run. Instead, Robinhood investors are known to pursue pennies or generally terrible companies.
If Robinhood investors want to be successful and build serious wealth, they will need to adjust their game plan in two ways. First, they need to think long-term to allow their investment thesis to play out. Second, they need to look for a higher quality business in which to invest.
While they have a focus on the horizon, these are three ideal stocks that Robinhood investors can buy now.
Over time, as their ally, young investors need to make growth stocks the foundation of their portfolio. That’s why the cloud platform service provider is on the edge Fast (NYSE: FSLY) is a company that can be bought hand in hand by millennial investors.
As you may recall, Fastly recently hit after lowering its third-quarter sales guidelines to a new range of $ 70 million to $ 71 million from a previous forecast of $ 73.5 million to $ 75.5 million. The company cut revenue because of the weakness of the company’s top client, TikTok, which President Trump threatened to ban in the state. Apparently, this threat slowed down the use of TikTok in the recently ended quarter.
It’s unfortunate that a company that accounted for 12% of Fastly’s revenue in the first half of 2020 saw data usage decline in the third quarter, but that’s far from an end-of-day scenario. Fastly’s declining target still suggests 42% sales growth for the year in the middle. In addition, Fastly reported its fastest growth in new customer growth in the second quarter of its initial public offering. It is safe to say that most of its customers are spending more money as the demand for content delivery grows. This should be positive for Fastly’s gross margin.
Ultimately, a revision of a company’s sales may prove to be a disguised blessing for long-term investors.
Another perfect stock that offers the potential to change the game for Robinhood investors willing to hold on to the long term is Square (NYSE: SQ). Although Square is expensive, it still offers an outstanding plus of its two key growth engines.
Square’s most famous growth segment is the company’s vendor ecosystem, which provides on-site devices, data analysis and even business loans. Square’s reseller ecosystem has been primarily a driver of growth for small businesses, but this segment, driven by trade charges, is increasingly being used by medium and large businesses. Square defines these businesses as an annual gross payment of at least $ 125,000. In the first half of 2020, 52% of the total GPV network crossing Square comes from these medium or large enterprises. If this trend continues, merchant fee revenues could jump.
The rapid growth of the Cash App is even more exciting for Square. Between the end of 2017 and June 2020, the monthly number of active users of the Cash App has more than quadrupled from 7 million to 30 million.
The Cash app allows Square to grow in a variety of ways as the company collects trade fees with purchases, accelerated fees for bank transfer services and bitcoin exchange fees. By 2022, the Cash App should be Square’s leading profit engine.
Robinhood investors would also be wise to consider buying in the Singapore-based Sea Limited (NYSE: SE) for the long term.
You may have heard that Southeast Asia can offer superior growth in the coming decades. Few companies are highly focused on this developing region of the world. Sea Limited gives investors focus as well as sustained high double-digit sales growth potential.
Sea’s gaming department generates most of its revenue. The company’s mobile game, Free fire, peaked with over 100 million daily active users in the second quarter. Monthly paying consumers more than doubled on an annual basis in July 2020.
But the company’s gaming arena is not one that will attract crowded investors to its shares. Rather, it is Shopee’s e-commerce platform, as well as its digital financial services venture.
The online shopping platform Shopee has the potential to be what Free market became South America. Although the losses are currently huge as Sea reinvests significantly in its e-commerce platform, adjusted e-commerce revenues almost tripled in the second quarter, with gross orders accelerating by 150%. This region has a thriving middle class that found comfort in ordering products online during the pandemic. Even in a post-pandemic world, the Shopee platform is here to stay and is expected to see significant growth.
In addition, Sea noted that the number of paying customers in mobile wallets exceeded 15 million in the second quarter.
He has many ways to make money, which makes him a logical purchase for Robinhood investors.