In this article, we will look at 5 best high risk high reward stocks to buy now. If you want to explore similar stocks, you take a look at 10 Best High Risk High Reward Stocks to Buy Now.
5. MongoDB, Inc. (NASDAQ:MDB)
Price-to-Sales Ratio as of August 1: 21.14
Number of Hedge Fund Holders: 61
MongoDB, Inc. (NASDAQ:MDB) develops and provides general-purpose database platforms worldwide. The company provides premium database platforms for enterprise customers to run in the cloud, on-premise, or in a hybrid environment. MongoDB, Inc. (NASDAQ:MDB) also provides a free open source version of its platform for software developers to familiarize themselves with the environment.
As of August 1, MongoDB, Inc. (NASDAQ:MDB) has lost roughly 35% of its value but is positioned to rebound and capture market share due to its industry-leading database platform. On July 12, Baird analyst William Power initiated coverage of MongoDB, Inc. (NASDAQ:MDB) with an Outperform rating and a $360 price target. Power noted that MongoDB, Inc. (NASDAQ:MDB) has gathered a reputation for itself as a leading next-generation database services provider. The analyst likes the company’s total addressable market and its flagship Atlas product’s growth statistics and sees MongoDB, Inc. (NASDAQ:MDB) positioned for strong growth in the years to come.
At the end of the first quarter of 2022, 61 hedge funds held stakes in MongoDB, Inc. (NASDAQ:MDB) worth $1.65 billion. This is compared to 56 positions in the previous quarter with stakes worth $2.07 billion.
As of March 31, Whale Rock Capital Management has stakes worth $218.95 million in MongoDB, Inc. (NASDAQ:MDB) and is the most prominent shareholder in the company.
Baron Funds, an asset management firm, thinks MongoDB, Inc. (NASDAQ:MDB) is a “great investment”. Here is what experts at Baron Funds had to say about the company in the firm’s first-quarter 2022 investor letter:
“MongoDB, Inc. is the market leader in modern operational databases, with its differentiated document database model. Shares increased on strong fourth quarter results, with an acceleration across total revenue (up 56%), subscription revenue (up 58%), and Atlas cloud revenue, its database as a service or DBaaS offering, (up 85%), and improved profitability. Customer additions grew more than 30%. More importantly, customer spending was also strong, especially for customers spending above $1 million annually, demonstrating that the expansion aspect of MongoDB’s business strategy is resonating as more companies are standardizing on MongoDB’s application data platform.”
4. Atlassian Corporation Plc (NASDAQ:TEAM)
Price-to-Sales Ratio as of August 1: 20.31
Number of Hedge Fund Holders: 65
Atlassian Corporation Plc (NASDAQ:TEAM) develops enterprise software products for software developers, project managers, and other software development teams. The company’s flagship products are Jira and Trello, both of which allow businesses to streamline their operations. Atlassian Corporation Plc (NASDAQ:TEAM) has made a market for its products, but the stock is vulnerable to macro headwinds such as a slowing economy and a declining job market. However, with the increasing digitization of businesses, software products like Jira, Trello, Confluence, and Bitbucket are expected to drive the company’s long-term growth.
On July 13, Piper Sandler analyst James Fish slashed his price target on Atlassian Corporation Plc (NASDAQ:TEAM) to $249 from $371 and referred to macro concerns for his lowered estimates. However, Fish remains Overweight on the company.
At the close of Q1 2022, 65 hedge funds held stakes in Atlassian Corporation Plc (NASDAQ:TEAM). The total value of these stakes amounted to $4.93 billion. This is compared to 69 hedge funds in the previous quarter with stakes worth $5.78 billion.
As of March 31, Renaissance Technologies owns more than 2.64 million shares of Atlassian Corporation Plc (NASDAQ:TEAM) and is the largest shareholder in the company. The fund’s stakes are worth $776.86 million and the investment covers 0.91% of Jim Simons’ 13F portfolio.
ClearBridge Investments, an investment management firm, mentioned Atlassian Corporation Plc (NASDAQ:TEAM) in its “International Growth ADR Strategy” first-quarter 2022 investor letter. Here is what the firm had to say:
“The structural bucket has the shortest investment horizon across the spectrum of growth companies we target in the Strategy. We closely monitor the macro impacts and turnaround progress of these companies and will be disciplined sellers when the thesis for a holding plays out. We also trimmed back workflow software maker Atlassian (NASDAQ:TEAM) after a strong runup in its shares in 2021. Most of our reductions in emerging growth have involved IT or related companies where innovation is a key to their business model. That said, we remain positive on the IT sector and have largely maintained holdings in our highest-conviction ideas.”
3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Price-to-Sales Ratio as of August 1: 25.68
Number of Hedge Fund Holders: 80
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides information security services for cloud applications. The company offers threat intelligence, managed security services, IT operations management, threat hunting, Zero Trust identity protection, and log management. The company is a global leader in the cybersecurity space and is making efforts to maintain its position. However, the company is suffering and as of August 1, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) has lost 28.12% over the past twelve months. The company is at risk of experiencing further losses amid a slowing economy and declining job market.
Wall Street is bullish on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and see the company capturing more market share in the long term. On July 22, Citi analyst Fatima Boolani lowered her price target on Crowdstrike Holding, Inc. (NASDAQ:CRWD) to $235 from $245 but reiterated a Buy rating on the shares. UBS analysts see CrowdStrike Holdings, Inc. (NASDAQ:CRWD) surviving a recession and named the stock among their top conviction picks.
At the close of Q1 2022, 80 hedge funds were long CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and held stakes worth $5.55 billion in the company. This is compared to 74 positions in the previous quarter with stakes worth $5.23 billion. The hedge fund sentiment for the stock is positive.
As of June 30, ARK Investment Management is the leading stakeholder in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and has stakes worth $19.51 million in the company.
Carillon Tower Advisers, an investment management firm, mentioned CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its first-quarter 2022 investor letter. Here is what the firm had to say:
“CrowdStrike (NASDAQ:CRWD), a security software platform designed to protect information technology assets and cloud workloads, delivered strong earnings results with solid recurring revenue, customer growth, and profitability. We expect strong demand to continue, largely in part due to the elevated cyber security threat environment as Russia may seek to attack governments and enterprises in retaliation for economic sanctions imposed in response to its attack on Ukraine.”
2. Snowflake Inc. (NYSE:SNOW)
Price-to-Sales Ratio as of August 1: 32.47
Number of Hedge Fund Holders: 81
Snowflake Inc. (NYSE:SNOW) provides cloud and data warehousing solutions for enterprises around the world. Snowflake Inc. (NYSE:SNOW) has remained volatile this year. As of August 1, the stock has dipped by 54.40% year to date and has a 52-week range of $110.26 to $405.00. Regardless, the company’s data analytics and warehousing platforms are still used by cloud computing giants such as Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
On July 12, Baird analyst William Power initiated coverage of Snowflake Inc. (NYSE:SNOW) with an Outperform rating and a $200 price target. Power noted that Snowflake Inc. (NYSE:SNOW) is an industry-leading provider of cloud solutions for data analytics, and is rising to prominence while overtaking legacy data providers. Power expects Snowflake Inc. (NYSE:SNOW) to record 66% revenue growth in fiscal 2023 and 49% in fiscal 2024. The analyst sees the stock suffering from recession risks but remains bullish on the company because it is generating solid free cash flows.
In the second quarter of 2022, Bailard Inc raised its stakes in Snowflake Inc. (NYSE:SNOW) by 496%, bringing them to a value of over $1 million. As of June 30, Bailard Inc is the leading shareholder in Snowflake Inc. (NYSE:SNOW).
At the close of Q1 2022, 81 hedge funds were eager on Snowflake Inc. (NYSE:SNOW) and held stakes worth $9.73 billion in the company. This is compared to 84 positions in the previous quarter with stakes worth $14.56 billion.
Here is what Baron Funds had to say about Snowflake Inc. (NYSE:SNOW) in its first-quarter 2022 investor letter:
“Snowflake grew revenues…106% (to $1.2 billion — while new bookings in the fourth quarter alone were $1.2 billion in contract value) with 12% margins. The stock was down 32% in the first quarter. We believe that these companies, along with many others that we own, are the long-term beneficiaries of digital transformation, a multi-decade paradigm shift sweeping global economies today. Frank Slootman, Snowflake’s CEO, explained it this way in his most recent earnings call with investors:
“Snowflake’s growth is driven by digital transformation and long-term secular trends in data science and analytics, enabled by cloud-scale computing and Snowflake’s cloud-native architecture. Snowflake is a single data operations platform that addresses a broad spectrum of workload types and incredible performance economy and governance. As a platform, Snowflake enables the data cloud, a world without silos and the promise of unfettered data science.”
In plain English it means that we want to make better decisions and we have all this data available to us. Snowflake will enable businesses to utilize all their data to improve their decision-making.
Snowflake Inc. provides a data platform for large-scale data analytics. Shares fell 32% during the first quarter despite reporting strong results, finishing 2021 with 106% year-over-year revenue growth, while booking $1.2 billion of new business in the fourth quarter alone. Shares declined due to the rotation out of fast-growing long-duration stocks as well as concerns over the company’s newly introduced infrastructure improvements, which make customers more efficient in using the Snowflake platform (lowering cost on a per usage basis). While some investors viewed that negatively due to the near-term impact on usage-based revenues, we see this as a positive development, since putting customers first tends to create a lot of value over the long term. We believe that by reducing costs to customers, they will migrate more workloads to Snowflake, making the company better positioned to capture a bigger portion of its large market opportunity and extending its technology leadership over competitors. We remain excited about Snowflake’s best-in-class growth at scale with favorable unit economics, addressing one of the largest opportunities in technology.”
1. Datadog, Inc. (NASDAQ:DDOG)
Price-to-Sales Ratio as of August 1: 25.59
Number of Hedge Fund Holders: 82
Datadog, Inc. (NASDAQ:DDOG) is among the pioneers of monitoring and observability services for cloud-scale applications. The company provides data analytics and various tools and services for IT operations teams worldwide. While analysts are reducing their forecasts across the software sector on macro headwinds and peer multiple contractions, Wall Street is bullish on Datadog, Inc. (NASDAQ:DDOG). On July 22, Citi analyst Fatima Boolani lowered her price target on Datadog, Inc. (NASDAQ:DDOG) to $175 from $195 but reiterated a Buy rating on the shares.
On July 25, RBC Capital analyst Matthew Hedberg trimmed his price target on Datadog, Inc. (NASDAQ:DDOG) to $115 from $167 but maintained an Outperform rating on the shares. Hedberg noted that the company’s platform strategy is a success and its products are in demand. The analyst sees the potential for long-term elevated growth and margin improvement for Datadog, Inc. (NASDAQ:DDOG).
At the close of Q1 2022, 82 hedge funds were long Datadog, Inc. (NASDAQ:DDOG) and held stakes worth $4.86 billion in the company. This is compared to 73 positions in the previous quarter with stakes worth $5.69 billion.
As of March 31, Lone Pine Capital owns roughly 3 million shares of Datadog, Inc. (NASDAQ:DDOG) and is the largest shareholder in the company. The investment covers 2.67% of Lone Pine Capital’s 13F portfolio.
Here is what Baron Funds had to say about Datadog, Inc. (NASDAQ:DDOG) in its “Baron Global Advantage Fund” first-quarter 2022 investor letter:
“Another example is Datadog, the leading infrastructure monitoring, application performance monitoring and log management software platform. Datadog’s stock declined 15% during the quarter, despite reporting sparkling operational results, with revenues accelerating to a growth rate of 84% year-over-year with 33% free cash flow margins, while guiding for 2022 significantly above expectations. Datadog added 4,600 new customers in the quarter, while existing customers continued to increase their spending on Datadog products at a rapid pace with the number of customers using four or more products increasing to 33% from 22% last year. While Datadog’s stock was down, its intrinsic value has undoubtedly increased. This is enabled by rapid innovation (Datadog released 13 new products in 2021) into a market that is benefiting from the secular growth in cloud, digital transformation, and the explosion in complexity as the number of vendors, diversity of technologies and related infrastructure continued to expand.”
You can also take a look at 14 Best Low Risk Stocks To Buy Now and 10 Best High Risk Stocks to Buy Right Now.
