In this article, we discuss the 10 best high-risk high-reward stocks to buy now.
The year 2022 has been unkind toward hypergrowth investments. According to Ethan Harris, head of global economics research at Bank of America Corp, “we’re just on the edge of a global recession.” With interest rates soaring and risk appetites disappearing, many former high fliers have crashed and burned this year. But while financial conditions have tightened, there’s no shortage of ongoing innovation that can lead to strong investor returns. Given enough time, many investments have the potential to double the initial principal amount, but many investors are instead attracted to the lure of high yields in short periods of time despite the possibility of unattractive returns over the long-term. Although growth stocks offer a higher growth rate when compared to the mean growth rate prevailing in the market, high-risk, high-reward growth stocks that can provide investors with substantially stronger returns. With that said, they also come with less certainty of future returns.
At the same time, the meme-trading phenomenon proved more than a year ago that sometimes moving against the grain can catch even the most seasoned investors off guard. Therefore, diving into some of the high-risk, high-reward growth stocks to buy can generate some tremendous upside. Some growth stocks that can provide significant returns due to their growth catalysts, both for the short-term and the long-term, include Neogen Corporation (NASDAQ:NEOG), UiPath Inc. (NYSE:PATH), and C3.ai, Inc. (NYSE:AI), among others discussed below. Please keep in mind that these stocks may still experience very sharp losses in the short-term. Amazon lost more than 90% of its value at one point during the 2000-2002 market crash and it was possible to buy a single Amazon share for less than $1 (split-adjusted price) at that time.
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Our Methodology
Here is our list of the 10 best high-risk high-reward stocks to buy 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. Data from more than 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
10 Best High-Risk High-Reward Stocks To Buy Now
10. SNDL Inc. (NASDAQ:SNDL)
Number of Hedge Fund Holders: 1
SNDL Inc. (NASDAQ:SNDL), also known as Sundial Growers, engages in growing, distributing and selling cannabis for adult-use and medical markets in Canada. Headquartered in Calgary, Canada, the company has three business segments: cannabis cultivation and production as well as cannabis retail stores – together are under Cannabis Operations – and investment operations. Earlier this year, the pot titan completed its acquisition of one the largest private-sector retailers of alcohol in North America, resulting in a 2,344% increase in net revenue in Q2.
On December 21, SNDL Inc. and Nova Cannabis announced that they have entered into an agreement creating a well-capitalized cannabis retail platform in Canada under a vertical integration model with SNDL’s upstream capabilities. According to the agreement, SNDL will vend into Nova’s cannabis retail business its existing 26 cannabis retail stores under the Spiritleaf and Superette banners located in Ontario and Alberta.
Just a single hedge fund was long SNDL Inc. on September 30 among the select group of top funds that are tracked by Insider Monkey’s database, down from ten funds in the middle of 2021. That lone fund was Israel Englander’s Millennium Management, which has held a stake in the company since Q3 2020 and which owned 113,828 shares at the end of Q3 2022.
Similar to Neogen Corporation, UiPath Inc., and C3.ai, Inc., SNDL Inc. is a high-risk, high-reward stock that aggressive investors can look into.
9. Bionano Genomics, Inc. (NASDAQ:BNGO)
Number of Hedge Fund Holders: 7
Bionano Genomics, Inc. (NASDAQ:BNGO) provides a platform to analyze the long segments of genomic DNA and other biomolecules structural variations. The company offers proprietary nanochannel chips, automated imaging instrument, integrated primary and secondary software, and application specific reagents. The company’s life science research business has been growing at a steady clip in recent quarters, with sales jumping by a healthy 55% in Q3 relative to the same period a year ago. Wall Street estimates that the company’s annual sales will rise by a staggering 72.5% in the upcoming year.
Earlier this October, Bionano Genomics, Inc. and Hamilton announced that the Long String VANTAGE, a system for automated, high throughput isolation of ultra high molecular weight DNA for use in optical genome mapping is commercially available. The Long String VANTAGE is the result of collaborative development from the companies and features new, innovative tools and consumables used for consistent, high-quality UHMW DNA extraction using human blood samples. The Long String VANTAGE is expected to begin shipping in Q1 2023.
On December 12, BTIG analyst Mark Massaro assumed coverage of Bionano Genomics, Inc. with a Buy rating and $3.50 price target. According to the analyst, the company is well on its way to transform the way the world sees the genome through optical genome mapping, and believes that Bionano offers an elegant solution to accurately identify structural variation, SV, and changes in chromosomes.
By the end of the third quarter, Bionano Genomics, Inc. was part of 7 hedge fund portfolios. The consolidated stakes these funds had in the company were worth $5.5 million, down from $7.9 million the prior quarter.
8. Spire Global, Inc. (NYSE:SPIR)
Number of Hedge Fund Holders: 10
Spire Global, Inc. (NYSE:SPIR) is a space-to-cloud data and analytics company that specializes in the tracking of global data sets powered by a large constellation of nanosatellites, such as the tracking of maritime, aviation and weather patterns.
Earlier this October, Credit Suisse analyst Scott Deuschle initiated coverage of Spire Global, Inc. with a Neutral rating and $2 price target. The analyst describes Spire as a global provider of space-based data and analytics. Furthermore, he appreciates the company’s growth potential and “strong “unit economics of its core offerings.
On November 9, Spire Global Inc. posted earnings for the third quarter of 2022, reporting an EPS of $0.16, which fell short of market estimates by $0.06. The revenue over the period however, was $20.4 million, up 113.4% compared to the revenue over the same period last year and surpassing market estimates by $0.51 million.
At the end of the third quarter of 2022, 10 hedge funds in the database of Insider Monkey held stakes worth $2.2 million in Spire Global, Inc., compared to 9 in the previous quarter worth $2.8 million.
7. Sorrento Therapeutics, Inc. (NASDAQ:SRNE)
Number of Hedge Fund Holders: 10
The epitome of a high-risk, high-reward stock, Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is a biopharmaceutical company that researches human therapeutic antibodies for the treatment of cancer, inflammation, metabolic, and infectious diseases. The company’s most valuable product candidate is arguably its third-generation tyrosine kinase inhibitor, abivertinib. This drug is presently in late-stage development for advanced non-small cell lung cancer, and in mid-stage development for metastatic castrate-resistant prostate cancer.
Earlier this November, Cantor Fitzgerald analyst Brandon Folkes initiated coverage of Sorrento Therapeutics, Inc. with an Overweight rating and $5 price target. According to Folkes, Sorrento has the potential to deliver multiple best-in-class products in high-value areas of oncology, pain and infectious disease. He believes the breadth of the company’s product pipeline has driven a valuation discount, which provides an attractive risk/reward.
D E Shaw owned roughly $7.9 million worth of stakes in Sorrento Therapeutics, Inc., becoming the company’s leading stakeholder in Q3 2022. Overall, 10 hedge funds tracked by Insider Monkey owned stakes in the company in Q3, growing from 6 in the previous quarter. These stakes hold a combined value of over $13.9 million.
6. Tilray Brands, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 16
Tilray Brands, Inc. (NASDAQ:TLRY) is an American pharmaceutical, cannabis-lifestyle and consumer packaged goods company, incorporated in the United States, headquartered in New York City. According to Morningstar’s equity strategist Kristoffer Inton, Tilray’s stock could rip higher by a noteworthy 219% over the next 12 months. Armed with these insights, Tilray Brands, Inc. might be a worthwhile speculative buy for ultra-aggressive investors.
At the beginning of November, Bernstein analyst Nadine Sarwat initiated coverage of Tilray Brands, Inc. with a Market Perform rating and $3.90 price target. The analyst believes that Tilray’s cannabis business has “best-in-class” gross margins and should be free cash flow positive this fiscal year. However, he also states that Tilray, just like other licensed producers, has suffered from meaningful share loss in Canadian cannabis. Sarwat states that she would be more constructive if Tilray regains meaningful share in Canada and/or Germany legalizes recreational cannabis.
According to Insider Monkey’s data, 16 hedge funds were bullish on Tilray Brands, Inc. at the end of Q3 2022, compared to 14 funds in the last quarter. D E Shaw is a prominent stakeholder of the company, with 3.4 million shares worth $9.3 million.
Tilray Brands, Inc. ranks among the likes of Neogen Corporation, UiPath Inc., and C3.ai, Inc. as high-risk, high-reward stocks to buy now.
5. IAMGOLD Corporation (NYSE:IAG)
Number of Hedge Fund Holders: 12
IAMGOLD Corporation (NYSE:IAG) is a mid-tier gold mining company that operates in three regions globally: North America, South America and West Africa, with a target production of 570,000 – 640,000 attributable ounces of gold in 2022 from Burkina Faso, Suriname and Canada.
On December 20, Stifel analyst Ingrid Rico upgraded IAMGold Corporation to Hold from Sell with a price target of C$3.25, up from C$2.50. According to the analyst, IAMGold has addressed its significant funding risk following three transactions, and is shifting now to execution and delivery of Cote while regaining its operational track-record. Rico now sees the company having filled its funding gap with proceeds from asset sales and financing arrangements.
On November 8, IAMGOLD Corporation posted earnings for the third quarter of 2022, reporting earnings per share of -$0.03, in-line with market estimates. The revenue over the period was $343.3 million, up 16.73.0% compared to the revenue over the same period last year and beating market estimates by $50.26 million.
According to Insider Monkey’s third quarter database, David Iben’s Kopernik Global Investors is the leading shareholder of the company, with more than 23.8 million shares worth $25.47 million. Overall, 12 hedge funds reported holdings stakes in the company as of Q3 2022.
4. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 12
Virgin Galactic Holdings, Inc. (NYSE:SPCE) is an aerospace and space travel company that is focused on the development, manufacture and operations of spaceships and related technologies for the purpose of conducting commercial human spaceflight. At the beginning of November, Virgin Galactic Holdings, Inc. announced an agreement with Axiom Space, a U.S.-based commercial space company, to support a microgravity research and training mission. The Virgin Galactic spaceflight, scheduled for the upcoming year, will prepare an Axiom Space astronaut for a trip to orbit.
Earlier this November, Jefferies analyst Greg Konrad lowered his price target on Virgin Galactic Holdings, Inc. to $11 from $14 but maintained a Buy rating on the shares. Following the company’s Q3 report, the analyst noted that schedules have stabilized with plans for the first commercial spaceflight “holding steady” at Q2 2023.
At the end of the third quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $18.4 million in Virgin Galactic Holdings, Inc., compared to 15 in the preceding quarter worth $42.95 million.
3. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 18
C3.ai, Inc. operates as an enterprise artificial intelligence (AI) software company that provides an application platform alongside an application development and runtime environment that enables customers to design, develop, and deploy enterprise AI applications. On December 13, C3.ai, Inc. announced that it had received the first three orders in its five-year, $500 million Production Other Transaction Agreement sponsored by the U.S. Missile Defense Agency (MDA), which will be applicable across the Department of Defense . All three orders will leverage the C3 AI Platform to accelerate deployment of critical enterprise artificial intelligence capabilities across the MDA.
On December 8, JMP Securities analyst Patrick Walravens lowered the price target on C3.ai, Inc. to $19 from $25 but kept an Outperform rating on the shares. According to Walravens, the company’s Q2 results were generally better than expected with subscription revenue growth accelerating to 26% from 24% last quarter. The analyst states that he likes the stock’s long-term opportunity due to the company’s scalable enterprise AI solution that solves problems with large economic impact in a variety of industries and offers a massive addressable market opportunity.
At the end of the third quarter of 2022, 18 hedge funds in the database of Insider Monkey held stakes worth $71.9 million in C3.ai, Inc., compared to 17 in the previous quarter worth $1 billion.
2. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 26
UiPath Inc. is a global software company that provides an end-to-end automation platform that enables monitoring of user activity to automate repetitive front and back office tasks, including those performed using other business software such as customer relationship management or enterprise resource planning (ERP) software. On December 1, UiPath Inc. posted earnings for the third quarter of 2022, reporting earnings per share of $0.05, beating market estimates by $0.06. The revenue over the period came in at $262.74 million, up 18.99% on a year-over-year basis and surpassing market estimates by $6.81 million.
Mizuho analyst Siti Panigrahi raised the price target on UiPath Inc. to $15 from $14 and maintained a Neutral rating on the shares of the company on December 2. Panigrahi states that the company delivered better than expected Q3 results and provided solid Q4 guidance despite macro concerns, currency headwinds and near-term disruption given its strategic repositioning.
Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in UiPath Inc. with 46.1 million shares worth more than $581 million.
In its Q3 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and UiPath Inc. was one of them. Here is what the fund said:
“Over the last three months, we similarly exited UiPath Inc. due to a change to our original thesis as we believe a new go-to-market strategy for its automation software could impact near-term execution. While we think process automation is a growing market, in a slowing macro environment single solution may be more vulnerable than the platform solutions of software providers who can bundle products to meet a wide range of needs. In addition, UiPath Inc. has a material component of sales sourced in Europe where the economy is more vulnerable.”
1. Neogen Corporation (NASDAQ:NEOG)
Number of Hedge Fund Holders: 32
Neogen Corporation is an international food safety company that provides test kits and relevant products to detect dangerous substances in food. The company was founded in 1982 and is based in Lansing, Michigan. Earlier this October, the company’s Megazyme Rapid Integrated Total Dietary Fiber – RINTDF – method had been accepted by the Association of Official Analytical Chemists, or AOAC International.
On November 22, William Blair analyst Brandon Vazquez upgraded Neogen Corporation to Outperform from Market Perform without a price target. After a meeting with the company’s management, the analyst stated that he was left “encouraged for upside and potentially accelerated growth” of Neogen and 3M’s combined food safety business. The analyst sees meaningful upside for Neogen shares and encourages investors to take advantage of the recent stock weakness “given the strong fundamental setup and relatively undervalued stock today.”
At the end of the third quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $422.6 million in Neogen Corporation, compared to 21 in the preceding quarter worth $225.6 million.
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This article is originally published at Insider Monkey.
