Summary

The author plans to buy shares of Robinhood (HOOD) during the next recession, believing it to be a growth stock with potential for significant gains post-downturn, despite its current reputational challenges.

Abstract

The article discusses the author's investment strategy amidst a potential recession, focusing on the resilience and growth potential of Robinhood (HOOD). Despite the company's tarnished reputation from the GameStop trading restrictions, the author sees value in Robinhood's core mission of democratizing market access through commission-free trades, fractional trading, and cryptocurrency offerings. The author cites a quantitative model suggesting a 75.88% potential gain for HOOD, which is currently undervalued in their opinion. The article also draws parallels between Robinhood's growth trajectory and that of Apple, highlighting the ease of use and comprehensive financial services offered by the platform. Although acknowledging the volatility of the market due to macro issues, the author expresses confidence in Robinhood's future, whether it grows independently or gets acquired at a premium.

Opinions

Robinhood's core idea of providing easy market access is highly valuable and has significant growth potential.
The author believes Robinhood is undervalued, with a potential gain of 75.88% based on a quantitative model.
Robinhood's user-friendly interface and expanding financial services are seen as compelling reasons for its success.
The author personally uses a similar platform, Wealthsimple, and would invest in it if possible, indicating a strong belief in the business model.
Despite market uncertainties and macro issues, the author is bullish on Robinhood's prospects, either as an independent company or through a potential acquisition.
The author discloses their ownership of HOOD shares, indicating a personal stake in the company's performance.
The article emphasizes that the information provided is not financial advice but for informational and entertainment purposes.

The only growth stock I’m buying in the next recession

With growth comes risk, but this stock has a future

When recession hits, nothing gets hit harder than growth stocks. But then, if said stocks survive the downturn, nothing rips harder coming out of it.

While most of the stocks I buy are value dividend payers, I do have space for one growth stock.

That stock is Robinhood (HOOD). I know, I know, I can hear the groans already.

Robinhood’s reputation has been in the dumps since the whole GameStop and AMC debacle, when it restricted trading and effectively helped crash the meme darlings.

But at its core, the idea behind it — providing easier access to markets via commission-free trades, fractional trading, and crypto — is A+ and has a ton of room to grow.

That it’s all wrapped up in an easy-to-use, gamelike package makes it all the more compelling.

Analytics line up too. According to the Macroaxis quantitative model, HOOD has a real value of $17.94 today, which suggests a potential gain of 75.88 percent.

While I also wouldn’t be surprised to see it below $5 a share in a recession, there are reasons to believe it’s already undervalued.

Full disclosure, I use the Canadian version of Robinhood (it’s called Wealthsimple), and I would buy shares in that company if I could. Unfortunately, it’s not publicly traded as a standalone platform, so I load Robinhood instead.

Since I joined Wealthsimple, I find myself slowly creeping over to all their banking options. Savings, retirement and chequing accounts, cash cards, Apple Pay, managed investing for fixed income.

These are all areas that a good trading app can grow in.

I liken it to the finance version of Apple going from deskstop computers, to iPods, to iPads, to iPhones, to video and music streaming, to fintech.

It’s just so easy to use, and as an active trader who is building a portfolio in some bigger ticket stocks fractionally, there are options that my main bank just doesn’t offer.

If you can’t tell already, I love the product and I’m excited about where it can go. And even if it doesn’t become a behemoth on its own, an acquisition at a premium is always a possibility.

Again, this is a white-knuckle time to be in the market and I certainly think all stocks will continue drop unless all these macro issues like the war in Ukraine, supply chain blockages, inflation and a hostile fed suddenly resolve themselves.

But in the depths of the next recession, HOOD is one growth stock I’ll be buying a lot more of.

I am not a financial advisor and nothing in this article should be construed as financial or legal advice. It is for information and entertainment purposes only. I currently own shares in Robinhood.

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