We recently published a list of the 12 Best Up and Coming Stocks to Buy According to Wall Street Analysts. In this article, we are going to take a look at where Robinhood Markets, Inc. (NASDAQ:HOOD) stands against other up and coming stocks to buy according to Wall Street Analysts.
Tom Lee, Fundstrat managing partner, joined CNBC’s ‘Closing Bell’ on March 22 to discuss the current market sentiment. When asked about the recent report on tariffs, which oscillates between an iron fist and an olive branch, Lee expressed optimism. He suggested that markets should interpret the situation positively because many clients view tariffs as punitive and potentially recession-inducing. However, a mutually agreed or reciprocal tariff deal could create a favorable scenario for businesses, potentially setting the stage for a significant recovery rally. Addressing the immediate challenge of volatility leading up to April 2, Lee acknowledged the dilemma investors face during this period of uncertainty. He noted that many are overwhelmed by market fluctuations and tempted to give up. Drawing a parallel to the Cuban Missile Crisis in 1962, which lasted 12 days, Lee pointed out that markets historically bottom before crises are resolved. For instance, during that crisis, the stock market reached its lowest point seven days in and recovered two-thirds of its losses before the resolution. He suggested this historical pattern could serve as a template for today’s market behavior.
When asked about the economy, Lee remarked on how quickly sentiment has deteriorated. He attributed part of this decline to divisive political leadership that affected consumer confidence and noted that CEO confidence has also dropped unexpectedly. CEOs have become hesitant to make decisions, which is contributing to what he described as a growth shock. However, he remained hopeful that this slowdown would be temporary if it does not persist for months. The conversation shifted to concerns about a potential recession, with Jeffrey Gundlach recently estimating a 50% to 60% chance of one occurring in the next few quarters. Lee countered this by stating that while a 10% drawdown in the S&P 500 already prices in a 40% chance of recession, markets do not fully align with Gundlach’s pessimistic view. He highlighted that economies like China, Europe, Canada, and Mexico have been outperforming the US since February 18. If punitive tariffs were truly driving global recessions, these economies would also be struggling. Instead, Lee described markets as more paralyzed than outright pessimistic.
Our Methodology
We used the Finviz stock screener to compile an initial list of the top stocks that went public in the last 5 years. We then selected the 12 stocks with high analysts’ upside potential as of March 21 that were also the most popular among elite hedge funds. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A successful business person confidently managing their finances on a mobile device.
Robinhood Markets, Inc. (NASDAQ:HOOD)
Average Upside Potential as of March 21: 54.60%
Number of Hedge Fund Holders: 79
Robinhood Markets, Inc. (NASDAQ:HOOD) operates a financial services platform that enables users to invest in a variety of assets. These include stocks, ETFs, options, gold, and cryptocurrencies. It offers features like fractional trading, recurring investments, and margin access, alongside educational resources such as news digests, online guides, and in-app tutorials. It also provides credit and cash card services and crypto wallets.
The company’s revenue surged in 2024 due to its active trader platform and new premium offerings. Q4 2024 revenue alone exceeded $1 billion, while full-year revenue surpassed $3 billion. This was a 58% increase from 2023. This growth was fueled by products like the Robinhood Gold Card, Robinhood Legend, and its expanding derivatives business, with the recently launched Robinhood Legend already generating $50 million in annualized trading revenue.
Customer engagement and investment on the platform also saw significant growth. Total customer deposits reached a record $50 billion, which was nearly a 50% increase. Robinhood Markets, Inc.’s (NASDAQ:HOOD) premium Gold service also experienced an 80% increase in subscribers, with over 30% of new customers in Q4 opting for the service, despite Gold representing only 10% of the overall customer base.
Robinhood Markets, Inc.’s (NASDAQ:HOOD) strong millennial user base, rapid deposit growth, and potential for expanded services and margin expansion make it a promising investment for the Artisan Mid Cap Fund. The Fund stated the following in its Q4 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in US Foods, Pure Storage and Robinhood Markets, Inc. (NASDAQ:HOOD). Robinhood has emerged as the go-to-trading platform for millennials, boasting approximately 25 million accounts (versus Charles Schwab’s 34 million). The company’s user base skews younger, with deposits growing significantly faster than the broader industry due to several drivers, including the rise of self-directed trading, the generational wealth transfer to millennials and increasing market share. As Robinhood’s customer base matures and accumulates wealth, we believe the company is well positioned to expand its product offerings to meet evolving financial needs. Furthermore, management’s focus on profitable growth and a 90% fixed cost structure suggests meaningful margin expansion potential.”
Overall, HOOD ranks 10th on our list of the best up and coming stocks to buy according to Wall Street Analysts. While we acknowledge the growth potential of HOOD, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HOOD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
