Former indian prime minister indira gandhi once said, "popularity is no guarantee of quality." She was right about that. And their message applies to investing as much as anything else.
For example, there are many stocks that are among the most popular on the U.S. Trading platform robinhood, but they are not high-quality investments. Investors, especially millennials, have gone for some really questionable stocks.
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But it's still possible for a stock to be both popular and a smart choice. I think that with the investment of 5.000 USD in these three popular robinhood stocks could make a fortune in the long run.
Seven of the 100 most popular stocks on robinhood are from companies developing vaccine candidates against COVID-19. I think novavax (WKN: A2PKMZ ) could be the biggest winner from this.
Novavax is currently evaluating the COVID-19 vaccine candidate NVX-cov2373 in a phase 1/2 clinical trial. The biotech's preliminary results from the phase 1 portion of this trial prompted some analysts to call the investigational vaccine potentially best in class.
When it comes to securing funding for the COVID-19 program, novavax is already among the best. The company has signed contracts totaling more than $2 billion. This includes a $1.6 billion contract with the U.S. Government's operation warp speed.
If NVX-cov2373 receives approval, novavax could realistically achieve annual sales of $10 billion or more. The company also appears poised to win approval for its flu vaccine candidate nanoflu, which could bring in as much as $1.7 billion a year. With a market cap of around $8 billion, this biotech could rise much further in the coming years.
Robinhood investors also seem to like stocks of companies that can benefit from the shift from cash to digital payments. Square (WKN: A143D6 ) is there in a leading position.
The company's credit card readers are used by many small and medium-sized businesses. Square also offers its customers a full ecosystem of products and services, including payroll applications, debit cards for businesses, small business loans, loyalty programs and online stores.
Square, however, is not focusing solely on company. The peer-to-peer payment platform cash app became an enormous growth engine for the company. Square reported more than 30 million active users in june.
Some may wonder if square is too expensive, however, as shares are trading today at more than 260 times expected earnings. I would not be surprised to see the stock fall if there are signs of weakness in the US economy. However, the long-term trends definitely work in square's favor. I think the stock could be worth much more by the end of the decade.
3. Paypal holdings
Paypal holdings (WKN: A14R7U ) is another popular fintech stock on robinhood. It hasn't been as big a winner in 2020 as square so far. Yet paypal's shares are still up nearly 80% since the beginning of the year.
The company posted its best quarter ever in the second quarter. Revenues and profits rose sharply as COVID-19 led to an increase in online shopping. I believe that one of the biggest and most far-reaching after-effects of the pandemic will be an acceleration of the trend toward digital payments.
Paypal is also investing heavily in expanding into contactless payments in stores. The company has already introduced QR code functionality in its products, but is still working with merchants to integrate the codes into point-of-sale systems. In my opinion, this is a really smart move, as it makes paypal more present in both e-commerce and brick-and-mortar stores.
Like square with its cash app, paypal has a winner on its hands with its venmo service. The company has added new features to venmo this year, most notably the ability to make direct deposits. I assume that the share will yield huge profits in the next ten years. That's because consumers and businesses will continue to shift to digital payments then.
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The motley fool owns and recommends shares of paypal and square. Keith speights owns shares of paypal and square . This article appeared on 16.8.2020 on fool.Com and has been translated for our german readers.