Analysts recommend these high-risk stocks to buy.
Risk management is the core of successful long-term investing. Investors comfortable with risk can set themselves up for huge long-term gains by identifying the best highly volatile, high-beta stocks to buy. Stocks with betas of 1.5 or higher tend to be at least 50% more volatile than the S&P 500. That volatility can generate huge swings in share price in the near-term that create too much risk for some investors. However, for aggressive investors willing to ride out the potential volatility, here are seven high-risk stocks to buy with betas of at least 1.5, according to investment research firm CFRA Research.
Coinbase Global Inc. (ticker: COIN)
Coinbase is an online cryptocurrency exchange. The stock is incredibly volatile and highly correlated to the cryptocurrency market, which is known for its wild swings and unpredictability. Coinbase shares are down 79% year to date as of July 13, but analyst David Holt says the sell-off is a buying opportunity for investors willing to stomach the risk. Holt says investors should look beyond the current “crypto winter” and instead focus on Coinbase’s first-mover advantage and potential to diversify into non-crypto products and services aimed at institutional investors. CFRA has a “buy” rating and $79 price target for COIN stock, which closed at $53.10 on July 13.
Unity Software Inc. (U)
Unity Software operates a software platform used to develop and monetize video games and other 3D digital content, including virtual and augmented reality content. VR and the metaverse are two of the largest potential long-term growth opportunities in tech today, but they are also high-risk bets given the two markets are still at such an early stage of development. Unity shares are down 77% year to date as of July 13, but analyst John Freeman projects compound annual revenue growth of 28% for Unity over at least the next three years. CFRA has a “strong buy” rating and $61 price target for U stock, which closed at $32.82 on July 13.
Roblox Corp. (RBLX)
Roblox is an entertainment platform for creating 3D worlds used for gaming and entertainment. The company is another early leader in metaverse development. Like Unity, Roblox shares have gotten hammered in 2022 and are down 64% year to date as of July 13. Freeman says a combination of daily active user growth, improving demographic trends, rising global incomes, 5G wireless network upgrades, growing interest for coding and a massive market for creative digital expression will continue to fuel greater than 20% annual revenue growth for Roblox in the long term. CFRA has a “strong buy” rating and $56 price target for RBLX stock, which closed at $37.08 on July 13.
Caesars Entertainment Inc. (CZR)
Caesars Entertainment is a U.S. hotel and casino operator that runs more than 50 properties, including Caesars Palace in Las Vegas. Analyst Arun Sundaram says Caesars is exposed to most of the positive trends of 2022 in the gaming market and has no exposure to the struggling Macao market. The Las Vegas market, Caesars’ largest market, has performed particularly well this year. In addition, Sundaram says Caesars has been investing heavily and gaining market share in the high-growth U.S. online sports betting and iGaming markets. CFRA has a “buy” rating and $100 price target for CZR stock, which closed at $38.14 on July 13.
Matador Resources Co. (MTDR)
Matador Resources is an independent oil and gas exploration and production company that is focused primarily on the Delaware Basin in West Texas and New Mexico. Unlike all the other stocks on this list that have significantly lagged the S&P 500’s 20.2% drop year to date as of July 13, soaring energy prices have driven Matador’s share price higher by 20.5% in the same period. Analyst Jonnathan Handshoe says there is even more potential upside ahead for Matador given the company is on track for 19% production growth in 2022. CFRA has a “buy” rating and $75 price target for MTDR stock, which closed at $44.50 on July 13.
UiPath Inc. (PATH)
UiPath provides software to help companies automate repetitive business tasks and improve efficiency. Holt says UiPath is dealing with several near-term head winds, including investor rotation out of growth stocks and a drop in client spending due to geopolitical uncertainties. However, Holt says labor challenges and rising costs will force many companies to invest in automation to preserve margins, which is good news for UiPath demand in coming years. Holt says the company is attractively valued and has both a strong balance sheet and industry-leading product offerings. CFRA has a “buy” rating and $24 price target for PATH stock, which closed at $19 on July 13.
Oatly Group (OTLY)
Oatly is the world’s largest producer of oat milk, an alternative to dairy milk favored by many vegan and lactose intolerant consumers. Sundaram says Oatly trades at a significant valuation discount to many of its plant-based packaged foods peers, including Beyond Meat Inc. (BYND). Sundaram says Oatly’s recent revenue growth slowdown largely stems from temporary capacity constraints and pandemic-related disruptions. Oatly has guided for a return to 50% production growth by the end of 2022. Sundaram projects 40% sales growth in 2022 and 55% growth in 2023. CFRA has a “buy” rating and $6 price target for OTLY stock, which closed at $3.83 on July 13.
7 high-risk stocks for aggressive investors:
— Coinbase Global Inc. (ticker: COIN)
— Unity Software Inc. (U)
— Roblox Corp. (RBLX)
— Caesars Entertainment Inc. (CZR)
— Matador Resources Co. (MTDR)
— UiPath Inc. (PATH)
— Oatly Group (OTLY)
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7 High-Risk Stocks For Aggressive Investors originally appeared on usnews.com
Update 07/14/22: This story was published at an earlier date and has been updated with new information.
