We recently compiled a list of the 12 Best High Volume Stocks to Buy According to Analysts. In this article, we are going to take a look at where Riot Platforms, Inc. (NASDAQ:RIOT) stands against the other high volume stocks.
Understanding trading volume is crucial for investors as it reveals the number of shares exchanged in a given period, which signals market interest and momentum. Stocks are classified as high or low volume based on this activity. High-volume stocks are the ones that are typically trading 500,000+ shares daily, and offer benefits like minimized volatility and tighter spreads, although they may involve speculative plays. Conversely, low-volume stocks present potential opportunities for value investors, though they carry higher volatility and liquidity risks. Analyzing volume helps identify market trends, confirm breakouts, and inform buy and/or sell decisions, especially for short-term trading strategies. However, it’s essential to consider volume alongside other factors for a comprehensive investment approach.
On February 20, Drew Matus, Chief Market Strategist at MetLife Investment Management, appeared on CNBC to discuss stock rotations and their implications for the market. When asked about the lack of upward revisions from the MAG7, Matus emphasized that it would be healthy for the market to see a rotation where the other 493 stocks in the S&P 500 begin to contribute more significantly. He explained that high concentration in equities tends to create instability, and a broader participation in growth would signal a healthier economic environment. The discussion then highlighted the evidence of this rotation, as the S&P Equal Weight index is up about 4.25% year-to-date, closely matching the 4.5% gain of the market-cap-weighted index. Matus acknowledged this trend and its importance, noting that slightly higher inflation has been manageable for companies able to pass along costs. He also pointed out that growth numbers remain strong and optimism persists, particularly among small business owners.
Methodology
We first used stock screeners to compile a list of stocks with high average 3-month volumes. We then selected 12 stocks that had a high average upside potential of over 25% and were the most popular among elite hedge funds. The stocks are ranked in ascending order of their average upside potential. We’ve also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
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).
A computer engineer working in a futuristic office, programming algorithms to mine cryptocurrency.
Riot Platforms, Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 37
Average Volume (3-Month): 33.917 million
Upside Potential as of February 19: 43.70%
Riot Platforms, Inc. (NASDAQ:RIOT) is a multifaceted company at the intersection of cryptocurrency and infrastructure. It operates as a leading Bitcoin mining enterprise in North America. Beyond its mining operations, it provides data center hosting and engineering services. This includes designing and manufacturing power distribution equipment, and catering to clients spanning data centers, utilities, and alternative energy sectors.
Towards the end of January, Piper Sandler maintained an Overweight rating on the company, setting a $23 price target. They pointed out its study of using 600 MW of unused Corsicana site capacity for AI/HPC, potentially increasing earnings. Following management’s focus on AI/HPC and an activist investor’s stake, the company started a feasibility study. Piper Sandler estimates this could add $6.73 per share in value.
So now the company is actively pursuing growth in the AI/HPC sector by using its existing power infrastructure. Riot Platforms, Inc. (NASDAQ:RIOT) has substantial power capacity: 700 MW at Rockdale, 1 gigawatt at Corsicana, and over 300 MW in Kentucky. The Corsicana facility is undergoing a second phase of development to reach its full 1-gigawatt capacity by 2026, with substation equipment already ordered. The company has initiated a formal feasibility study to assess this AI/HPC opportunity. It aims to capitalize on the rising demand for power assets and diversify its revenue streams, as well as utilize its infrastructure to serve the growing AI/HPC market.
Overall RIOT ranks 6th on our list of the best high volume stocks to buy according to analysts. While we acknowledge the potential of RIOT as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RIOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.