In this article, we discuss 5 of the cheapest stocks on Robinhood. If you want to see more of the cheapest stocks on Robinhood, the risk/reward and methodology of this list, go directly to 12 Cheapest Stocks on Robinhood.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) has fallen 24% year to date given the macroeconomic headwinds. Given the stronger U.S. dollar, Apple Inc. (NASDAQ:AAPL)’s international earnings are lower in dollar terms, and given inflation, some consumers are choosing to buy cheaper smartphones rather than the iPhone. While the company faces headwinds, Apple Inc. (NASDAQ:AAPL) nevertheless has a huge loyal userbase and the company still has growth opportunities if it sells more services or expands its ecosystem.
Wedgewood Partners commented on Apple Inc. (NASDAQ:AAPL) in a Q3 2022 investor letter,
Apple Inc. (NASDAQ:AAPL) grew revenues +5% (foreign exchange adjusted and excluding Russia) driven by record iPhone revenues that were up about +3% on an exceptional year ago comparison of +50%. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business that has generated almost $80 billion of revenue over the past 4 quarters. As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially ICs) as well as software, continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG) shares have declined almost 40% year to date given slowing growth and a weak ad market. Alphabet Inc. (NASDAQ:GOOG) also faces potential competition from TikTok. Nevertheless, Alphabet Inc. (NASDAQ:GOOG) has a lot of potential in terms of developing AI applications such as Waymo. Alphabet Inc. (NASDAQ:GOOG) continues to dominate search, which could help the company continue to grow in the future. Mayar Capital mentioned Alphabet Inc. (NASDAQ:GOOG) in a Q3 investor letter,
“Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.
Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…”
3. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 166
In addition to being popular with many Robinhood investors, Visa Inc. (NYSE:V) is also popular with analysts as the stock has an average price target of $248.67 versus its stock price of $193.93 as of 11/9. Visa Inc. (NYSE:V)’s forward P/E of 20.10 is also pretty attractive given the company’s substantial moat and earnings growth potential.
RiverPark Large Growth Fund commented on Visa Inc. (NYSE:V) in a Q3 2022 investor letter,
“We reinitiated a small position in Visa, which we had previously owned for years (selling out of the position at higher levels in February). We continue to believe that the long-term secular growth trend towards digital payments remains intact and has been further enhanced by the COVID crisis. The growth in debit cards, contactless payments, e-commerce, and now, buynow-pay-later (BNPL), are all driving digital payment penetration, and we continue to be impressed with the long-term growth potential of V (and our other payment holdings Mastercard, Adyen, and PayPal).”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
Meta Platforms, Inc. (NASDAQ:META) is a cheap stock given its forward P/E of 12.4. Recently, Meta Platforms, Inc. (NASDAQ:META) announced layoffs of 11,000 employees in addition to extending its hiring freeze into the first quarter. If the company can keep its user base and grow earnings like the market expects, Meta Platforms, Inc. (NASDAQ:META) has long term upside potential.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Like other tech giants, Microsoft Corporation (NASDAQ:MSFT) has faced some near term headwinds given the macro environment. With the high inflation, energy costs are higher and PC sales are slower. If there is a recession next year, enterprises might not spend as much as expected. In the long term, however, Microsoft Corporation (NASDAQ:MSFT) has a lot of value given its high quality earnings and also the growth potential in the cloud. With 258 hedge funds in our database of 895 holding shares at the end of Q2 2022, Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 12 Cheapest Stocks on Robinhood.
You can also take a look at 20 Most Admired Companies in the World in 2022 and 15 Biggest Dow Companies By Market Cap.
