Finding the most undervalued Robinhood stocks isn’t as difficult a task as you might expect. The trading platform is often thought of as a place for traders to buy meme stocks like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). And to be clear, both stocks are among the 100 most popular stocks on the platform. However, a look at the most popular stocks on Robinhood shows a much more conventional group of equities.
This is significant because according to data from finder.com, Robinhood (NYSE:HOOD) had over 23.6 million funded customers globally as of February 2024. Of those, the company reported 10.9 million monthly active users at the end of 2023. That’s significantly higher than its nearest competitor, even if the average account value is only around $4,000.
The takeaway is that many Robinhood investors are far more conventional in their taste for stocks than you might think. And that means looking for stocks trading at a discount. Here are three undervalued Robinhood stocks that have been poor performers in the last year but offer significant upside for the rest of 2024.
Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) has been a lackluster performer for several years. In the last five years, the total return on JNJ stock is 29%. And in the last 12 months, the stock’s total return is loss of 4.3%. Some of the lack of interest is because the company spun off its consumer products division into Kenvue (NYSE:VUE).
What’s left deserves a closer look. The streamlined JNJ consists of two business units: Innovative Medicines and Medtech. In both areas, the company has significant announcements that could drive the business higher.
On May 31, Johnson & Johnson completed its acquisition of Shockwave Medical. This gives JNJ access to Shockwave’s exclusive intravascular lithotripsy (IVL) platform that is approved for coronary artery disease (CAD) and peripheral artery disease (PAD).
On the Innovative Medicines front, Johnson & Johnson completed its $2 billion acquisition of Ambrx in March. This increases its exposure to antibody drug conjugates (ADCs) which are an area of heavy investment in the pharmaceutical space.
JNJ stock has a consensus “buy” rating with a price target of $171.77, a gain of approximately 16%. And that goes along with a dividend that yields 3.4% and has been increasing for 62 consecutive years.
Starbucks (SBUX)
Starbucks (NASDAQ:SBUX) has been another difficult hold over the last few years. The total return for SBUX in the last five years is 9.5%. And in the past 12 months, it’s been one of the worst-performing stocks with a total loss of 14.8%. But in the last month, the stock is bouncing higher which may signal that it’s reached the “so bad it’s good stage.”
What would make investors believe that? First, look at China. In December 2023, the company projected double-digit revenue growth in the country in 2024. This was fueled by new store expansion and strong comparable sales. This is contradicted a little bit by the company’s latest earnings report in which it forecast a full-year single-digit revenue decline in China. The truth may wind up being somewhere in between.
However, a much simpler look may come from the company’s revenue and earnings. In the first two quarters of the 2024 fiscal year were on par, if not slightly better than 2023. That could be why SBUX stock gets a “strong buy” rating from eight out of 32 analysts.
Shopify (SHOP)
Shopify (NYSE:SHOP) is last on this list of undervalued Robinhood stocks. The stock is down more than 20% in 2024, and retail investors are polarized about its future.
The bulls point to the company’s investment in augmented reality (AR) and virtual reality (VR) tools as e-commerce moves into the metaverse. They also see the company’s year-over-year revenue and earnings growth as a bullish sign. On the other hand, naysayers will point out that year-over-year revenue is slowing. That wouldn’t be what you want to see from a growing tech stock.
However, analysts seem to be much less ambivalent about SHOP stock. Out of 47 analysts, 25 give the stock either a “strong buy” or “buy” and there’s no rating lower than “hold.” They also are forecasting earnings growth of over 50%, which would support a higher stock price. That means investors may want to view the recent bounce off of a level around $56 as a signal to catch a rally in this undervalued stock.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
