Better Growth Stock: Robinhood vs. Mastercard

It is desirable for a company you own to have a good business story. After all, you want to realistically believe that the business can grow, otherwise what's the point in owning it? But sometimes investors get so caught up in new stories that they place too high a valuation on untested businesses. That's why you might want to consider buying an old reliable like (NYSE: MA) over an exciting upstart like Robinhood (NASDAQ: HOOD).

From a big-picture view, Robinhood is nothing more than a discount broker. However, that's not a fair explanation of the business. The company single handedly forced the industry to lower commissions to zero. It used technology to attract a new, younger customer group. And it has been aggressively expanding to include everything from stocks to exchange-traded funds to cryptocurrency.

All in, the company is an innovator that is disrupting an old and boring business. That is a very attractive story and one that has taken Robinhood from an income statement bleeding red ink to one that is solidly in the black. And it has achieved this feat in a relatively short period of time, too. There are good reasons investors like Robinhood.

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Source Fool.com