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 CFRA Research analysts.
— Nvidia Corp. (ticker: NVDA)
— Boeing Co. (BA)
— Applied Materials Inc. (AMAT)
— Lam Research Corp. (LRCX)
— Freeport-McMoRan Inc. (FCX)
— KLA Corp. (KLAC)
— Airbnb Inc. (ABNB)
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Nvidia Corp. (NVDA)
Nvidia is a semiconductor stock that develops graphics cards and mobile processors used in personal computers, wireless devices and workstations. While Nvidia has been one of the best-performing stocks in the market over the past decade, the stock’s 33% decline in the past year demonstrates the risk in owning it. However, analyst Angelo Zino says Nvidia investors willing to ride out the near-term volatility and uncertainty surrounding semiconductor supply chain disruptions and geopolitical tensions between the U.S. and China will be rewarded in the long term. CFRA has a “buy” rating and $200 price target for NVDA stock, which closed at $168.99 on Jan. 13.
Boeing Co. (BA)
Boeing is one of the biggest global suppliers of large commercial aircraft and is one of the top U.S. defense contractors. Boeing’s major problems started in 2019 when the company was forced to ground its 737 MAX fleet following two fatal crashes. In fact, Boeing’s stock price is down 37% overall in the past five years. Analyst Colin Scarola says the risk in Boeing’s stock stems from “egregious quality-control lapses and unhealthy debt,” but he says the company’s core business will prove to be resilient over time. CFRA has a “strong buy” rating and $230 price target for BA stock, which closed at $214.13 on Jan. 13.
Applied Materials Inc. (AMAT)
Applied Materials is the world’s largest wafer fabrication equipment maker for the semiconductor industry. The cyclical semiconductor industry has always been volatile, and analyst Keven Young says Applied Materials faces risks associated with competitive pressures, component sourcing and a potential global recession in 2023 or 2024. However, he says Applied Materials shares are undervalued and the company’s growing exposure to recurring revenue will drive earnings multiple expansion over time. He projects Applied Materials’ revenue will drop 8% in fiscal 2023 before rebounding 9% in fiscal 2024. CFRA has a “strong buy” rating and $145 price target for AMAT stock, which closed at $109.97 on Jan. 13.
Lam Research Corp. (LRCX)
Lam Research is the largest manufacturer of etching products and other tools for the semiconductor industry. Young says Lam faces risks associated with a weakening global economy, U.S. export controls on sales to China and a potential downturn in the memory market. Young says growing exposure to recurring revenue helps offset risks of further export controls. The stock may also have some valuation support priced at just 12.9 times forward earnings, and it pays a decent 1.5% dividend — the highest of any stock on this list. CFRA has a “buy” rating and $542 price target for LRCX stock, which closed at $473.67 on Jan. 13.
Freeport-McMoRan Inc. (FCX)
Freeport-McMoRan is the world’s largest publicly traded copper producer, and it’s also a major producer of gold and molybdenum. The high risk of investing in copper has paid off for investors in the past year thanks to inflation. In fact, Freeport-McMoRan’s 6.6% gain in the past year has been the only positive return among the stocks on this list in a difficult market. Analyst Matthew Miller says Freeport faces risks associated with falling commodity prices, but he says the company has a strong long-term growth outlook. CFRA has a “strong buy” rating and $46 price target for FCX stock, which closed at $45.05 on Jan. 13.
KLA Corp. (KLAC)
KLA is a semiconductor equipment company that produces yield-monitoring and process control systems. Young says KLA’s two main risks are softening semiconductor industry demand and market share losses, but he says the company is well positioned to defend against competitors in the inspection, metrology, yield management and process control markets. He says the transition to lower nanometer nodes will create process control challenges and drive demand for KLA’s services. Young is also bullish on KLA’s opportunities in automotive electronics and projects 10% revenue growth in fiscal 2023. CFRA has a “strong buy” rating and $400 price target for KLA stock, which closed at $420.04 on Jan. 13.
Airbnb Inc. (ABNB)
Airbnb operates an alternative online and mobile travel platform that connects hosts and guests. Airbnb’s volatile share price makes it a risky investment. Airbnb priced its initial public offering at $68 per share in December 2020, but the stock opened for trading at $146 and traded as high as $219.94 in early 2021 before falling all the way back down to under $90 in early 2023. Zino says investors should buy the Airbnb dip and projects annual net-bookings growth of at least 10% over the next three years. CFRA has a “buy” rating and $125 price target for ABNB stock. which closed at $100.37 on Jan. 13.
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7 High-Risk Stocks for Aggressive Investors originally appeared on usnews.com
Update 01/17/23: This story was published at an earlier date and has been updated with new information.
