As there is a fair chance of the market witnessing solid correction based on several concerns, it’s important to pick a stock after analyzing its ability to survive a downturn based on its fundamental strength and ability to capitalize on the ongoing health crisis. Adding the popularity component to your stock selection method could further enhance your chance of gaining now.
After all, a stock’s price movement significantly depends on how popular it is among investors irrespective of fundamentals.
Alibaba Group Holding Ltd (BABA), Nike, Inc. (NKE), Sony Corporation (SNE), and Starbucks Corporation (SBUX) are currently part of the Robinhood 100 Most Popular list they are leaders in their respective industries with a proven short-term history of outperformance. Modified offerings, upcoming product launch, and fundamental strength should help these stocks easily survive if we witness another market turmoil this year.
Alibaba Group Holding Ltd (BABA)
BABA, the leading platform for global wholesale trade in China has been operating for over two decades. Its financial affiliate Ant Group Inc. is set to make the largest stock market debut on November 5th, raising at least $34.5 billion and holding dual listings in Shanghai and Hong Kong. The 11.11 Global Shopping Festival, or ‘Singles Day,’ is held on November 11th every year. But a new sales window has been added this year from November 1st and is life now. BABA is on the Robinhood 100 Most Popular list having 96% of the analyst ratings as ‘Buy.’
BABA’s revenue increased 34% year-over-year to $21.7 billion for the fiscal first quarter ended June 2020. Alibaba cloud, BABA’s cloud-computing arm is expected to turn profitable by March 2021. The revenue from cloud computing increased 59% year-over-year to $1,747 million for the quarter. EPS increased by 18% year-over-year to $0.26. Digital Media and Entertainment revenue increased 9% year-over-year to $990 million primarily due to an increase in revenues from online games and membership subscriptions.
Analysts expect BABA’s revenue to increase by 54.6% for the second quarter ended in September 2020 and 38.3% in 2021. The company’s EPS is expected to increase by 14.1% for the about-to-be-reported quarter, 27.2% next year, and at a rate of 3.7% per annum over the next five years. Moreover, BABA has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
Cainiao, the logistics affiliate of BABA launched end-to-end logistics and supply-chain services for local businesses in South Korea last month. It is expected to reduce the shipping time in half. To monetize China’s growing interests and demand for global music and culture, Bravado extended its product offerings through Tmall Global which is one of the core businesses of BABA. Having expanded into various domains, BABA is well-positioned to gain. The stock gained 43.7% year-to-date and is currently trading 2% below its 52-week high.
How does BABA stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #1 out of 115 stocks in the China industry.
Nike, Inc. (NKE)
One of the largest global suppliers of athletic apparel and footwear, NKE was founded in 1964. Associated with the iconic slogan “Just do it,” the company offers products in eight categories, including running, basketball, football, men’s training, women’s training, sportswear, action sports, and golf. NKE is on the Robinhood 100 Most Popular list having 87% of the analyst ratings as ‘Buy.’
NKE successfully made the digital transition and it is reflected in the first-quarter results (ended August 2020). The company’s digital sales increased 82% year-over-year. The company’s direct sales also increased by 12% year-over-year to $3.7 billion. EPS for the quarter increased 10% year-over-year to $0.95 and surpassed the consensus estimate by 102%.
Analysts expect NKE’s revenue to increase by 12.2% in 2020 and 11.5% in 2021. The company’s EPS is expected to increase by 79.4% in the fiscal year 2021 and at a rate of 25.1% per annum over the next five years.
The company is set to release new products in Kyrie Irving’s signature line launching its four colorways on November 11th followed by the BK Black colorway on November 23rd. NKE has been able to meet the increased demand for fitness apparel amid the pandemic. The stock gained 104% since hitting its 52-week low of $60 in mid-March. It is currently trading 7.3% below its 52-week high.
NKE’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, Peer Grade, and Industry Rank and a “B” for Buy & Hold Grade. Among the 34 stocks in the Athletics & Recreation industry, it’s ranked #1.
Sony Corporation (SNE)
Headquartered in Tokyo, Japan, SNE is a "creative entertainment company with a solid foundation of technology." The company is engaged in the development, design, manufacture, and sale of various kinds of electronic equipment, instruments, and devices for consumer, professional and industrial markets, as well as game consoles and software. SNE completed 50 years on the NYSE this year. SNE is on the Robinhood 100 Most Popular list having 92% of the analyst ratings as ‘Buy.’
SNE’s sales from the Game & Network Services (G&NS) segment increased 52.2% year-over-year and has been the main revenue driver for the second quarter ended September 2020. Music segment sales also increased by 11.6% year-over-year owing to higher sales for recorded music and an increase in streaming revenues. Analysts expect SNE’s revenue to increase by 9.4% in 2021. The company’s EPS is expected to increase by 5.6% in 2021 and at a rate of 5.2% per annum in the next five years. SNE’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
SNE is scheduled to launch the PlayStation 5 on November 12th. Ahead of the launch, PS5 is already beating Microsoft's (MSFT) Xbox in the online black market. The company is in final talks with AT&T (T) to acquire Crunchyroll, a US animation-streaming service for $957 million. The stock gained 25.7% year-to-date and is currently trading 0.5% below its 52-week high.
It’s no surprise that SNE is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. In the 21-stock Entertainment - Media Producers industry, it is ranked #1.
Starbucks Corporation (SBUX)
Based in Seattle, Washington, SBUX is the world’s dominant coffee house chain. Not only does SBUX roast and market specialty coffee but also offers a selection of premium teas, fine pastries, and other treats. It offers its products under the brand names: Starbucks, Teavana, Seattle's Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi. SBUX is on the Robinhood 100 Most Popular list having 44% of the analyst ratings as ‘Buy.’
SBUX opened 480 net new stores in the fourth quarter ended September 27th, 2020, yielding 4% year-over-year growth. The company adjusted itself to the “new normal” and in the fourth quarter, 75% of its sales volume in the United States came from the drive-thru and Mobile Orders, balanced with expanded in-store seating in stores where it is safe. The number of active Starbucks Rewards (SR) members increased by 10% year-over-year to 19.3 million.
Analysts expect SBUX’s revenue to increase by 20.3% in 2020 and 6.3% in 2022. The company’s EPS is expected to increase 139.3% in the current fiscal year, 16.8% next year, and at a rate of 46.6% per annum over the next five years. SBUX’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
SBUX announced that it would be closing 100 additional stores in the United States and focus on to-go orders to adapt to the “new normal.” The number of mobile orders increased significantly amid the pandemic. The company also announced its plans to open outlets in Laos as part of Asian expansion. SBUX geared up for the upcoming holiday season with the return of its holiday menu items, including the Peppermint Mocha returning for its 18th year. The stock gained nearly 72% since hitting its 52-week low in mid-March. It is currently trading 9.5% below its 52-week high.
SBUX’s strong fundamentals are reflected in its POWR Ratings, it has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. Within the Restaurants industry, it’s ranked #1 out of 49 stocks.
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BABA shares were trading at $286.51 per share on Tuesday afternoon, down $24.33 (-7.83%). Year-to-date, BABA has gained 35.08%, versus a 5.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.4 “Strong Buy” Robinhood Stocks to Buy if the Market Crashes appeared first on StockNews.com