Robinhood Markets (NASDAQ:HOOD) continues to fulfill its mission to “democratize finance.” As of the end of the third quarter of 2021, more than 11 million traders had opened accounts on the platform during the year to date period.

In many cases, those who make use of those accounts appear to favor growth tech stocks. Given the long-term catalysts that are driving them, investors may want to consider opening positions in a pair of companies that are among the 100 most widely held stocks in Robinhood accounts: Advanced Micro Devices (NASDAQ:AMD) and Roblox (NYSE:RBLX).

A trader researches stocks on a laptop at home.

Image source: Getty Images.

The case for AMD

AMD has delivered outsize gains for long-term shareholders — it’s up by more than 950% over the last five years and by more than 20% in the last 12 months. Still, since late November, it has lost about 25% of its value amid the general sell-off in tech stocks.

Despite the decline, investors have good reason to consider buying this semiconductor giant. At the Consumer Electronics Show in early January, the company unveiled its Radeon 6000 series graphics cards, which have specs that could make AMD more competitive with Nvidia (NASDAQ:NVDA) in the high-end graphics processing unit market. It also showed off the Ryzen 7 5800X3D gaming processor to the market, which it claims is the “world’s fastest gaming processor.”

Investors will see how well it performed in 2021 when it releases its fourth-quarter and full-year earnings on Feb. 1. In its previous earnings release in October, the company guided for 65% revenue growth for 2021, an upward revision from the 60% it predicted at the time of the Q2 earnings release.

Also, AMD still trades at a P/E ratio of 34. Admittedly, this multiple could reflect analysts’ projections for 19% revenue growth in 2022, a much slower, but still robust rate. Nonetheless, AMD’s valuation is far cheaper than that of Nvidia, which trades for 70 times earnings. From a growth-to-value standpoint, AMD stock could easily continue to beat the indexes.

The case for Roblox

The metaverse company with a mission of “powering imagination” was accomplishing that goal for investors — until it wasn’t. The stock briefly spiked to above $140 per share in November — a more than 90% gain over its March IPO price. But in the two months since, it has lost about half its value. The result is that it’s now trading within a few percentage points of where it began trading last spring.

Fortunately, the company could recapture those gains as its software continues to attract developers and gamers. Users of the Roblox platform can create and share experiences in 3D environments on various platforms, from smartphones to virtual reality headsets.

In addition, Roblox can become an avenue for income generation for its users, as they can claim a portion of the revenue generated from their creations. The company is well-known for stoking the imaginations of children — about half of its user base is under the age of 13. This positioned it to soar earlier during the pandemic as the number of users and hours spent on the platform surged.

Nonetheless, the fact that most kids have returned to in-person school has not impaired its revenue growth. The company will report fourth-quarter and full-year earnings on Feb. 15. Analysts forecast a 196% increase in revenue for 2021, as well as a slowdown to just 21% growth in 2022.

Still, while that slower revenue growth may disappoint some investors, the fact that Roblox now trades at about 20 times sales may mitigate their concerns. Also, its recent share price drop has pushed it to nearly its lowest valuation ever. And by way of comparison, rival Unity Software trades at about 29 times sales. Roblox’s cheaper valuation multiple could help draw investors back to it as interest in the metaverse accelerates.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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