In this article, we discuss the 10 best high risk stocks to buy right now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best High Risk Stocks to Buy Right Now.
Retail investors have poured billions of dollars into meme stocks this year as they scramble to find the next GameStop and AMC Entertainment, the two companies that were the subject of a short squeeze earlier this year. However, in this rapidly evolving economy, emerging technologies offer these investors a much safer pathway to success with the same high risk/high reward ratio that is often associated with meme stocks. According to a report by Gartner, big companies plan to invest $1 trillion into emerging technologies by 2023.
Stocks that come to mind in this regard include Advanced Micro Devices, Inc. (NASDAQ:AMD), Pinterest, Inc. (NYSE:PINS), and Roblox Corporation (NYSE:RBLX), among others discussed in detail below. These operate in the semiconductor, interactive entertainment, and social media domains. Artificial intelligence, smart analytics, and high speed broadband are also expected to lead this boom in the tech world. A survey by KPMG has found that more than 80% of companies in the US will invest in emerging tech in the coming years.
The true mark of a great investor is risk-taking. For example, even legendary value investors like Warren Buffett have become famous for their risky bets on stocks like Bank of America or American Express Company, both investments that were made at the height of a crisis or scandal when the share price of the firms was at record lows. Similarly, for those who invested in Facebook and Apple before they became the biggest firms in the world, like prominent investor Gary Vaynerchuk, also took a huge risk that paid off in the long term.
Luis Louro / shutterstock.com
Our Methodology
Here is our list of the 10 best high risk stocks to buy right now. These companies were selected based on the products or services they offer. On their present fundamentals, they could grow or fail, but investors should consider them because of the potential they offer in the long term. These stocks are also volatile. We have mentioned the 52-week range for each stock.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best High Risk Stocks to Buy Right Now
10. ChargePoint Holdings, Inc. (NYSE:CHPT)
Number of Hedge Fund Holders: 17
52-Week Range: $13.01-$49.48
Analysts have turned bullish on ChargePoint Holdings, Inc. (NYSE:CHPT) stock as the adoption of electric vehicles increases around the globe. Stifel analyst Stephen Gengaro recently initiated coverage of the stock with a Buy rating and a price target of $23, highlighting that the firm was well positioned to benefit from the expansion of EV charging networks across the US in the next few decades.
In earnings results for the first quarter, posted in early June, ChargePoint Holdings, Inc. (NYSE:CHPT) reported earnings per share of -$0.84, missing estimates by $0.74. The revenue over the period was $40 million, up 23% year-on-year.
At the end of the second quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $149 million in ChargePoint Holdings, Inc. (NYSE:CHPT), down from 24 in the preceding quarter worth $207 million.
Just like Advanced Micro Devices, Inc. (NASDAQ:AMD), Pinterest, Inc. (NYSE:PINS), and Roblox Corporation (NYSE:RBLX), ChargePoint Holdings, Inc. (NYSE:CHPT) is one of the stocks that hedge funds are buying.
9. Skillz Inc. (NYSE:SKLZ)
Number of Hedge Fund Holders: 20
52-Week Range: $07.97-$46.30
Skillz Inc. (NYSE:SKLZ) operates in the interactive entertainment industry. The company has stepped up investments in the internet and mobile gaming market in recent months, hiring former Amazon executive Vatsal Bhardwaj for the purpose. The stock has benefited from a rally in video game sales in the past five months. However, despite the rosy near-term performance, the share price has remained volatile throughout the year.
In August, Canaccord analyst Michael Graham maintained a Buy rating on Skillz Inc. (NYSE:SKLZ) stock and lowered the price target to $23 from $30, underlining that the stock had been under pressure despite solid revenues because of a user base that wasn’t expanding.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Skillz Inc. (NYSE:SKLZ), down from 26 in the previous quarter worth $672 million.
8. Upstart Holdings, Inc. (NASDAQ: UPST)
Number of Hedge Fund Holders: 21
52-Week Range: $22.61-$401.49
Upstart Holdings, Inc. (NASDAQ:UPST) owns and runs a cloud-based lending platform that uses artificial intelligence to automate the loan process. The new technology used by the company reduces wait times and speeds up loan deliveries. The company has grown dramatically in the past few months, crossing over $25 billion in market valuation. This, although a positive news, has also led to valuation concerns, with analysts like Jefferies downgrading the stock recently to reflect this sentiment.
However, Upstart Holdings, Inc. (NASDAQ:UPST) has continued to expand in the meanwhile, signing new partnerships to improve loan access in remote areas. It recently partnered with Abound Credit Union in Kentucky for the purpose.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in Upstart Holdings, Inc. (NASDAQ:UPST) with 13.3 million shares worth more than $1.6 billion.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
7. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 26
52-Week Range: $11.80-$132.73
QuantumScape Corporation (NYSE:QS) makes and sells solid state lithium ion batteries. As the electric vehicle industry grows by leaps and bounds, battery tech has emerged as a key player in the evolving dynamics. Even carmakers like Toyota have pledged to invest billions into battery tech in the coming years to stay competitive in the auto market. QuantumScape, despite relatively weaker fundamentals, has been a retail investor and hedge fund favorite in the EV space, largely because of the technological prowess of the firm.
In July, investment advisory JPMorgan initiated coverage of QuantumScape Corporation (NYSE:QS) stock with a Neutral rating and a price target of $35, underlining that the firm was expected to play a “vital” role in the development of battery tech around the world.
At the end of the second quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $321 million in QuantumScape Corporation (NYSE:QS), down from 29 in the preceding quarter worth $534 million.
In its Q1 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and QuantumScape Corporation (NYSE:QS) was one of them. Here is what the fund said:
“QuantumScape Corporation is an early-stage developer of solid-state battery technology for electric vehicles aimed at improving key aspects of batteries, including safety, charging times, energy density, and cost. The company went public via a SPAC in November. After rapid appreciation, the stock came under pressure when the company raised additional capital to help accelerate its commercialization process. We exited our small position, as described below.
We sold QuantumScape Corporation, an early-stage solid-state electric vehicle battery innovator, because it was an undersized position with an ambitious valuation. We will continue to monitor QuantumScape’s developments and may revisit the company as an investment at a future point in time.“
6. Plug Power Inc. (NASDAQ:PLUG)
Number of Hedge Fund Holders: 34
52-Week Range: $13.92-$75.49
Investments in clean energy businesses have expanded beyond solar to many emerging technologies in recent years. Plug Power Inc. (NASDAQ:PLUG), a company that markets hydrogen fuel cell solutions, is one such firm. The stock has recently benefited from the clean energy initiative of US President Biden, with the government extending tax breaks for clean energy firms and increasing investment in emerging clean tech. Analysts like Morgan Stanley have also turned constructive on the stock recently.
On October 14, Plug Power Inc. (NASDAQ:PLUG) issued guidance for the next fiscal year, predicting sales guidance of up to $850 million that could rise to as high as $3 billion by 2025. The former was a 65% increase from the sales of 2021 above market estimates of $759 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Plug Power Inc. (NASDAQ:PLUG) with 14 million shares worth more than $507 million.
In addition to Advanced Micro Devices, Inc. (NASDAQ:AMD), Pinterest, Inc. (NYSE:PINS), and Roblox Corporation (NYSE:RBLX), Plug Power Inc. (NASDAQ:PLUG) is one of the stocks that is on the radar of institutional investors.
In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Plug Power Inc. (NASDAQ:PLUG) was one of them. Here is what the fund said:
“We also closed our short position in Plug Power this quarter as the market was subsumed with enthusiasm over their recent acquisitions, resulting in an almost 80% rally in the stock over ten trading days. Our decision to exit was painful at the time as we were forced to reconcile with a collective exuberance that was (and is, in our opinion) not grounded reality. In hindsight, it was the correct decision as we avoided most of its recent vertical trajectory.”
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Disclosure. None. 10 Best High Risk Stocks to Buy Right Now is originally published on Insider Monkey.
