Robinhood's most popular stock list is a great resource for investors looking for their next big bet. However, it's important to invest in companies with a competitive edge over their rivals and sustainable growth drivers for long term success. Here are two Robinhood stocks worth buying right now because they fit those criteria.
The first stock is Walt Disney (DIS -1.29%) a blue-chip entertainment brand with a compelling pivot towards direct-to-customer streaming. The second stock is MGM Resorts (MGM 0.44%) a beaten-down casino operator that can leverage its well-known brand to outperform in the sports betting industry. Both companies are trading at attractive valuations because of the coronavirus pandemic and could make good additions to your portfolio.
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1. Walt Disney
The coronavirus pandemic has battered Disney's amusement park and studio entertainment businesses -- especially in the fiscal 3rd quarter due to movement restrictions and lockdowns in the U.S due to the crisis. But despite the near term headwinds, Disney's long-term bull thesis remains intact.
Disney's core businesses are poised to bounce back in the second half of the year, and the company's fast-growing streaming segment can help power the next leg of long-term growth by offsetting weakness in studio entertainment in these challenging times.
Disney reported third-quarter earnings on August 3. And as expected, the results were weak. Total revenue fell 42% to $11.78 billion due to significant declines in the parks and experiences segment (which includes the Disney cruise line) and its studio entertainment segment, which includes the company's theatrical releases. The good news is that the worst is over, and investors can expect a sustained recovery in the second half of the year.
Disney has reopened most of its major parks with social distancing measures to prevent the spread of COVID-19. While revenue won't immediately soar back to pre-pandemic levels, the reopening comes just in time for the crucial holiday season which can have a big impact on full-year results.
On the studio entertainment side of things, Disney is making a convincing pivot to streaming which can help carry the company over until theaters open back up. CEO Bob Chapek has decided to release the much-anticipated Mulan movie on Disney+ on September 4 for $29.99 in the U.S. Disney's direct to consumer business boasts $101.5 million subscribers across Disney+, ESPN+, and Hulu.
2. MGM Resorts
Like Disney, MGM Resorts is a brand leader in the entertainment industry. The casino operator boasts a footprint in major gaming hubs like Las Vegas and Macau. And while the company faces significant coronavirus-related headwinds, its long term bull thesis remains intact.
MGM's Asian gambling business is poised to recover as Chinese authorities ease travel restrictions on Macau. And in the United States, the company can leverage its trusted brand to compete with less well-known rivals in the fast-growing sports betting market.
MGM reported fiscal second-quarter earnings on July 30 -- and be warned, these results include the full brunt of the coronavirus pandemic. Total revenue fell 91% to $289.8 million while net losses stood at $857.26 million for the quarter. While those numbers might send some investors running for the hills, this could be an opportunity to scoop up shares at a discount and benefit from the company's potential value.
MGM began reopening its U.S. properties in May and June, and it's Macau assets will get a boost after the Chinese government lifted quarantine and visa restrictions on tourists traveling to the gambling hub.
MGM has also used to coronavirus pandemic as an opportunity to permanently streamline its operations. In the second quarter, the company reduced its operating expenses by 85% and plans to permanently reduce up to $450 million in annual property and corporate expenses going forward. Over the long term, the casino operator is poised to become a major player in the sports betting industry through its BetMGM app. The platform has market access in 19 states and is expected to add $130 million in net revenue in 2020.
