Robinhood (NASDAQ: HOOD) developed a reputation as being a platform for traders and casual stock market observers to buy and sell stocks, but it has evolved into much more than that. The company is rapidly emerging as a leading brokerage for retirement accounts and has done a solid job of reinventing itself as a place to buy stocks and hold them for the long term.
With that in mind, here are three stocks among the most popular on Robinhood’s platform that could be worth a closer look for buy-and-hold investors.
An incredible business (well, two) with lots of room to grow
It’s tough to find a company that is the clear market leader in not one, but two businesses with lots of growth potential, but that’s exactly what Amazon.com (NASDAQ: AMZN) is. Amazon is well-known for being the e-commerce leader, a field in which it is so dominant that it has a greater market share than its next 10 competitors combined. E-commerce is still in the relatively early stages, accounting for roughly 15% of all U.S. retail sales today.
The other side of the business is Amazon Web Services, or AWS, which is Amazon’s cloud services business. It isn’t quite as dominant as the e-commerce business, but it is a clear leader over main rivals from Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Not only is this the more profitable side of Amazon’s business, but the global cloud computing market is expected to grow to $2.5 trillion by 2032 — roughly five times its 2022 size.
If Amazon can simply maintain its market share in its two core businesses, it could be a home run for patient investors. And that doesn’t even consider the possibility of other, new businesses. With the stock still almost 20% below its all-time high, now could still be a great time to buy.
A turnaround story with tons of upside
Unlike the other two stocks in this discussion, Disney (NYSE: DIS) significantly underperformed in 2023. While returning CEO Bob Iger has made some smart moves, there’s still plenty of investor pessimism about the company’s ability to make streaming a profitable business long-term, as well as other areas of concern.
However, this could be a great entry point in this iconic business for long-term investors. The streaming division’s losses have been narrowing consistently. Spending at Disney’s parks on a per-guest basis is about 40% more than in comparable 2019 periods, and with a planned $60 billion investment in experiences over the next decade, there could be plenty of additional upside ahead.
Put your stocks on autopilot
It might surprise investors who primarily consider Robinhood to be a trading platform, but the Vanguard S&P 500 ETF (NYSEMKT: VOO) is one of the more popular investments among the platform’s users.
If you aren’t familiar, this is an exchange-traded fund that tracks the S&P 500 benchmark index. In other words, it pools investor money and invests it into all 500 companies that make up the S&P 500, aiming to match its performance over time. It takes the guesswork out of stock investing and allows you to simply buy hundreds of stocks at once. The Vanguard S&P 500 ETF has rock-bottom fees (0.03% expense ratio), which will allow you to keep more of your gains.
Speaking of gains, putting your investments on autopilot by simply buying an index fund might seem like a boring strategy, but you might be surprised at how lucrative it can be. The S&P 500 has historically produced annualized returns of about 10% over multi-decade periods. If you were to invest $5,000 per year in an S&P index fund for 30 years, you could end up with more than $800,000.
Don’t expect a smooth ride
Note that the title says that these are stocks to “buy and hold forever.” While you don’t literally need to hold them forever, the takeaway is that I’m suggesting all three of these as long-term investments. I have no idea what they’ll do over the next few weeks, months, or even over the next year. Nobody does. Even the S&P 500 index fund can move up or down by 30% or more in a single year.
The point is that you should approach these stocks as long-term investments and treat them accordingly. Be prepared to ride out some volatility along the way, but these three stocks should deliver excellent performance over the long run for patient investors.
Where to invest $1,000 right now
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Matthew Frankel, CFP® has positions in Amazon, Vanguard S&P 500 ETF, and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Vanguard S&P 500 ETF, and Walt Disney. The Motley Fool has a disclosure policy.
3 Robinhood Stocks to Buy and Hold Forever was originally published by The Motley Fool
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