2 Robinhood shares to buy before the end of the year
Stock exchange platform Robinhood Markets (NASDAQ: HOOD) attracted new investors to the market and brought changes to the industry, such as commission-free trading. The top 100 stocks traded on the platform reflect deep diversity.
Among this group, retail stocks Amazon (NASDAQ: AMZN) and Coca Cola (NYSE: KO) show potential for further gains in the coming months.
Online retail giant Amazon has enriched countless investors with the massive gains it has made over the years. In the last decade alone, the stock has risen by more than 1,760%.
During the pandemic, Amazon bolstered its reputation as a recession-resistant company, responding to growing demand for online shopping and cloud services. Nonetheless, the end of pandemic lockdowns, supply chain disruptions and inflationary pressures weighed on the company. The stock has risen by around 5% over the past 12 months, much slower than in the past.
Additionally, its third-quarter net profit fell to $ 3.2 billion – a consequence of higher operating costs – despite a 15% increase in revenue. Expecting these challenges to continue into the fourth quarter, the company predicts a modest year-over-year revenue increase of 4% to 12%. He also believes quarterly operating profit will be between breakeven and $ 3 billion due to current challenges, including nearly $ 4 billion in additional costs and unfavorable exchange rates.
Yet while Amazon’s results have been disappointing recently, supply chain issues and a return to offline activity are likely temporary disruptions rather than permanent ones. In addition, the portrait of the company on three quarters appears more favorable. For the first nine months of 2021, net sales increased 28% to $ 332 billion from the same period in 2020. In addition, net profit jumped 35% to $ 19 billion.
Amazon Web Service (AWS), which provides cloud computing support for businesses, was also a positive. This segment’s operating profit in the third quarter jumped 38% from a year ago. AWS also reported an operating margin of 30%. Thus, the growth of the most profitable part of the business remains robust.
Additionally, the stock’s price-to-earnings (P / E) ratio of 65 remains at or near its multi-year low after hitting 100 earlier in the pandemic. Therefore, investors can buy Amazon at a relative discount today. They can also take comfort in the fact that the most profitable part of the business is still enjoying robust growth. As retail conditions stabilize, investors may well turn to Amazon stocks.
2. Coca Cola
Coca-Cola has struggled in recent years as the business diversifies into other drinks. With operations in virtually every region of the world, it has sought to stimulate its growth by developing products beyond its flagship soft drinks. Since acquiring Minute Maid in 1960, she has built a portfolio of over 200 brands.
Among its most notable acquisitions, the Mexican company Topo Chico in 2017 with the aim of competing in the sparkling mineral water market. Topo Chico also became the basis for entering the alcohol market with hard seltzer earlier this year. On top of that, Coca-Cola increased its investment in energy drinks by buying the 85% of BodyArmor it didn’t already own for $ 5.6 billion in cash. That, along with its Powerade sports drink, has helped Coca-Cola control around 22% of that market.
Coca-Cola’s expansion also helps generate the cash flow needed to support its dividend. The company generated $ 8.5 billion in free cash flow in the first nine months of this year. The dividend is claiming $ 5.4 billion, or 63%, of that money, meaning the 59-year history of consecutive Dividend King payout increases looks sure to continue. At $ 1.68 per share per year, the stock offers a dividend yield of around 2.9%, well above the S&P 500 1.3% index return.
Free cash flow increased largely because revenue for the first nine months of 2021 increased 20% from the prior year to over $ 29 billion. However, higher operating expenses and income taxes offset slower growth in the cost of goods sold. As a result, net profit for the first three quarters edged up 17% to $ 7.4 billion.
Finally, let’s look at the current valuation of Coca-Cola. The stock’s P / E ratio of 28 is consistent with the company’s historical average – and just slightly lower than its competitor PepsiCothe multiple of 29 of its profits. Given that its shares have only risen 7% in the past 12 months, Coca-Cola may not impress growth investors. Still, with its generous and growing dividend, the stock could serve risk averse investors well.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.