Young traders have high hopes for these momentum stocks.
There has been a surge of young and first-time traders in 2020. Robinhood and other free trading apps have experienced a spike in new users, many between the ages of 18 and 35. Robinhood recently restricted public access to its user data, but competing trading app Webull shares a similar user base of young traders. Webull added 450,000 accounts in the second quarter alone, and its millennial and Gen Z traders have been extremely active so far this year. Here's a look at 10 momentum stocks -- those showing price movement -- Webull users are buying heading into the fourth quarter.
Electric vehicle maker Tesla is one of the most divisive stocks on Wall Street in 2020, but it's also a top performer. Young investors have piled into Tesla and other EV stocks all year, sending Tesla shares higher by more than 400% year to date. That momentum has continued in the last three months, driving Tesla shares up about 75% since the beginning of July. Tesla cooled off a bit in September following a 5-for-1 stock split and a disappointing Battery Day event. However, Webull traders used the dip to add to their positions, betting on a strong finish to 2020 from Tesla.
Advanced Micro Devices (AMD)
Advanced Micro Devices is one of the world's largest suppliers of microprocessors and graphics cards for personal computers. AMD was long considered an underdog in competing with chip leader Intel Corp. (INTC). But AMD's share of the x86 central processing unit market has increased since late 2017 from 22.3% to 37.4%, while Intel's has dropped from 77.6% to 62.5%. As a result, AMD's share price has soared more than 85% year to date and more than 60% in the last three months. In July, Intel reported manufacturing issues associated with its 7-nanometer chips, potentially extending AMD's window of opportunity to gain market share.
Nvidia Corp. (NVDA)
Nvidia is another semiconductor momentum stock that has had a historic run over the last decade, and younger investors are betting that momentum continues. Despite a difficult September for tech stocks, Nvidia shares were up 1.2% on the month, thanks in part to a massive $40 billion buyout of chipmaker ARM Holdings. Analysts say the ARM acquisition will provide a major boost to Nvidia's artificial intelligence business, but it may face regulatory scrutiny in the near term. Webull users likely love Nvidia's positioning in long-term growth markets like cloud computing, AI, 5G communications and the internet of things.
Zoom Video Communications (ZM)
Social distancing and work-from-home stocks have been on fire in 2020, and videoconferencing stock Zoom Video Communications has been one of the market leaders. In the most recent quarter, Zoom reported a 355% increase in revenue and a more than 3,000% increase in net income compared with a year ago. Experts and economists say a large portion of the jobs that have shifted to remote work will remain that way, even after the health crisis subsides. Young investors are betting Zoom's momentum will continue after the stock gained more than 30% in the last month.
Like Zoom Video, electronic signature and contract company DocuSign is a major beneficiary of the remote work environment. The stock is up about 20% in the last three months, and CEO Daniel Springer recently said DocuSign's total addressable market could ultimately be as large as $45 billion. Last quarter, revenue was up 45.2% and total customers grew by 39%. Unfortunately, with the stock now up about 200% year to date, analysts at Deutsche Bank and Piper Sandler have expressed concerns about DocuSign's valuation. Webull data suggests young investors aren't deterred by the momentum stock's expensive share price.
Electric vehicle maker Nio is often called the Tesla of China, and its stock has even outperformed Tesla year to date. Nio's momentum continued in a difficult September for the market. Nio shares gained about 25% in the last month, in large part thanks to a 133% year-over-year increase in September vehicle deliveries. Young investors see EVs as a long-term growth opportunity, and Nio is a top play on the largest emerging-market economy in the world. Deutsche Bank recently reiterated a bullish rating on Nio and praised the company for its high favorability ratings among customers.
Spartan Energy Acquisition Corp. (SPAQ)
Spartan Energy Acquisition is a special purpose acquisition company, or SPAC, that has struck a deal to take EV maker Fisker public. SPACs provide an alternative path to the public market for companies that would typically pursue an initial public offering, and SPACs have become a major trend on Wall Street in 2020. Popular EV maker Nikola Corp. (NKLA) and sports betting app DraftKings (DKNG) are just two examples of companies that merged with public SPACs this year. Fisker and Spartan Energy announced a merger in July, and young investors are hoping that the combined company will soon join the EV stock boom.
SPI Energy Co. (SPI)
Incredibly, shares of photovoltaic solar products company SPI Energy skyrocketed more than 1,250% in a single day in late September after the company announced it is adding an EV and EV charging subsidiary. Young investors, in particular, are all-in on anything EV-related, and SPI Energy shares were up more than 500% in September, the best performance of any stock on this list. Webull users seem convinced that EV stock momentum will continue in the fourth quarter, but SPI will need to start putting up some bigger numbers than the $24 million in revenue it reported last quarter.
DraftKings is a fantasy sports app and possibly the best pure-play U.S. sports gambling investment. DraftKings has benefited from two major tailwinds in recent quarters. First, the pandemic forced the shutdown of many casinos, and travel restrictions have kept people away from gambling destinations like Las Vegas. At the same time, the gradual loosening of sports betting laws on a state-by-state basis is consistently opening up new markets for DraftKings throughout the country. In addition, major professional and college sports, including football, have now returned to action, and DraftKings shares are up more than 55% in the last month alone.
Workhorse Group (WKHS)
Of all the EV momentum stocks Webull users are buying, Workhorse has had the most momentum in 2020. The electric commercial vehicle stock is up more than 700% year to date and about 15% in the last month. Investors are optimistic that the company can secure a $6 billion contract to supply the U.S. Postal Service with electric delivery vehicles. In addition, Workhorse holds a 10% ownership stake in Lordstown Motors, which is in the process of going public via a merger with SPAC DiamondPeak Holdings Corp. (DPHC). The SPAC merger could significantly increase the value of Workhorse's Lordstown stake.
Millennials are buying these stocks:
-- Tesla (TSLA)
-- Advanced Micro Devices (AMD)
-- Nvidia Corp. (NVDA)
-- Zoom Video Communications (ZM)
-- DocuSign (DOCU)
-- Nio (NIO)
-- Spartan Energy Acquisition Corp. (SPAQ)
-- SPI Energy Co. (SPI)
-- DraftKings (DKNG)
-- Workhorse Group (WKHS)