We recently published a list of 10 Worst High-Risk High-Reward Growth Stocks To Buy. In this article, we are going to take a look at where Affirm Holdings, Inc. (NASDAQ:AFRM) stands against other worst high-risk high-reward growth stocks to buy.
Is the Tariff Solution Around the Corner?
On March 14, Tom Lee managing partner and head of research at Fundstrat Global Advisors appeared on a CNBC interview to talk about how the markets react to crises and what approach investors should take considering the broader perspectives. Lee believes that the market will recover and it has recovered every time in the past as well. He emphasized that one thing that investors have to keep in mind is that the market was at an all-time high less than a month ago. When a market falls from a 52-week high, it is a market pricing in crises and the current market is pricing in for recession which brings the “Fed Put” into play. Lee highlighted that the Fed is now in a position to cut rates, which should mitigate the downside.
Moreover, Lee noted that he thinks that there is a very high probability that a tariff solution will happen before April 2. He explained that it is simple to see that China, Europe, Canada, and Mexico have been outperforming the US. This tells that these countries are not headed towards a recession. In addition, Lee also quoted the 1962 Cuban Missile Crisis, highlighting that it was a 12-day crisis, however, the market bottomed only 7 days into the crisis and had recovered two-thirds, 5 days before the crisis ended.
In addition, to Tom Lee, Nancy Tengler, Laffer Tengler CIO and CEO further added that she believes that the market is still in a bullish stance, however, it is going through an overdue correction. She noted that while the sentiment is low and the expectations across the board have fallen, however, the bond market is stable which tells that the market is not headed towards a recession. Moreover, she also highlighted that most of the recession sentiment is driven by the import figures which rose 70% in January. However, it was just the purchasing managers trying to get ahead of the tariffs. Nancy believes that similar to 2022 this will also settle in, moreover, the decelerating growth is also healthy in terms of the price correcting which she believes was much needed. Lastly, Nancy pointed out that the current market volatility can be a solid buying opportunity for investors.
Our Methodology
To curate the list of 10 worst high-risk high-reward growth stocks to buy we used the Finviz stock screener, Yahoo Finance, CNN, and Seeking Alpha as our sources. Using the screener we aggregated a list of growth stocks with beta (5-year monthly) between 2 and 5, analyst upside potential of at least 30%, and 3-year sales growth of more than 20%. Next, we check the beta values from Yahoo Finance, analyst upside potential from CNN, and sales growth from Seeking Alpha. Lastly, we ranked the stocks in descending order of the analyst upside potential, from best to worst. We have also added hedge fund sentiment around each stock. Please note that the data was recorded on March 18, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Affirm Holdings, Inc. (NASDAQ:AFRM)
Beta (5Y Monthly): 3.64
3-Year Sales Growth: 35.61%
Number of Hedge Fund Holders: 61
Analyst Upside Potential: 68.89%
Affirm Holdings, Inc. (NASDAQ:AFRM) operates as a financial technology company specializing in buy now, pay later solutions and related financial services. Its platform allows users to split purchases into interest-free installments or monthly payments with interest rates ranging from 0% to 36%.
On March 19, Goldman Sachs analyst Will Nance maintained a Buy rating on the stock, with a price target of $56. The company had a long-standing partnership with Walmart since 2019, allowing customers to split purchases into installments at Walmart stores and online. However, recently Klarna, one of the competitors of Affirm Holdings, Inc. (NASDAQ:AFRM) has replaced the company as Walmart’s exclusive installment loan provider. The analyst noted that Walmart contributed 5% to the company’s Gross Merchandise Volume and 2% of adjusted operating income over six months ending December 2024. This smaller-than-anticipated reliance reduces the immediate financial risk of losing exclusivity to Klarna.
Moreover, the partnership with Walmart faced lower profitability due to underwriting complexity and other commercial terms. Therefore despite the anticipated challenges due to the ending of this partnership, Goldman Sachs raised the company’s rating. The revised outlook reflects reduced operating income headwinds and confidence in the company’s ability to offset losses through diversified partnerships. It is one of the worst high-risk high-reward growth stocks to buy.
Overall, AFRM ranks 5th on our list of worst high-risk high-reward growth stocks to buy. While we acknowledge the potential of AFRM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AFRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
