The stock market seems to be on the verge of a fall swoon. Between lingering inflation, soaring interest rates and a flare-up of geopolitical tensions, there are plenty of risk factors to consider as 2023 draws to a close. But this troubling economic outlook has created some opportunity. For investors with a strong stomach, the recent market sell-off is pushing many potential home-run stocks down to highly attractive valuations, with the following six looking particularly compelling.
Just remember that with high reward comes a high degree of risk. Here are six stocks to buy for aggressive investors:
— JD.com Inc. (ticker: JD)
— ClearPoint Neuro Inc. (CLPT)
— Albemarle Corp. (ALB)
— Controladora Vuela Compañía de Aviación SAB de CV (VLRS)
— Nice Ltd. (NICE)
— Bank of Hawaii Corp. (BOH)
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JD.com Inc. (JD)
JD.com is one of China’s leading e-commerce sites. In recent years, JD had enjoyed tremendous growth, and shares at one point quadrupled in value. Like many e-commerce names, however, the gains from 2020 and 2021 proved to be fleeting. JD shares have given back all their prior gains and have plunged to prices not seen since 2014. This comes even as JD has doubled revenues over the past five years and has become strongly profitable. So profitable, in fact, that shares are trading for less than eight times forward earnings and pay a 2.5% dividend yield. It’s rare to get this sort of value or dividend from a leading global e-commerce firm.
The bear case is understandable. China’s economy is in a deflationary slump. And there is little investment appetite for Chinese equities right now given the rising political tensions. However, JD shares are cheap enough that risk-tolerant investors should consider taking a position heading into the holiday season.
ClearPoint Neuro Inc. (CLPT)
ClearPoint Nuero is a specialty medical device company. It has focused on developing innovative systems to enable cutting-edge surgical techniques for the brain and heart. Specifically, its system allows pharmaceutical companies to use intraparenchymal delivery, which is to say that it enables drugs to bypass the blood-brain barrier and reach the brain directly. This has the potential to revolutionize the treatment of brain-related diseases such as Parkinson’s that have proven exceptionally difficult to treat with conventional therapies. ClearPoint is gaining significant commercial traction for its products as more and more pharma companies have started employing its delivery mechanism.
Revenues have grown in each of the past five years, rising from $7.35 million in 2018 to an estimated $25.9 million this year. The reason ClearPoint is a risky pick is that this figure still represents a small revenue base and the firm remains unprofitable. But if and when a blockbuster drug comes to market using ClearPoint’s technology, that would be a game-changer for the firm.
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Albemarle Corp. (ALB)
Albemarle is a U.S.-based specialty chemical company that produces goods such as bromine. In recent years, it has become one of the world’s largest producers of lithium, deriving the substance from mines in the U.S., Chile and Australia. Shares tumbled earlier this year following some confusion around potential regulatory changes in Chile. After a brief recovery, ALB stock has collapsed once again. This time, shares are diving thanks to a plunge in lithium prices. In particular, the Chinese battery market has slowed down, which has crushed near-term lithium demand. There has been a general sell-off in the renewable energy space this year, and some analysts are beginning to worry about a potential slowdown in government stimulus for renewable power and electric vehicles as well. Albemarle is trading at less than five times trailing earnings. However, given the crash in lithium prices, Albemarle’s earnings are likely to fall sharply next year. Even with this headwind in mind, ALB stock is down nearly 40% over the past year, and that’s more than enough to set ALB up for a favorable long-term entry point, as shares go for just 6.3 times forward earnings.
Controladora Vuela Compañía de Aviación SAB de CV (VLRS)
Controladora Vuela Compañía de Aviación, more commonly known by the brand name Volaris, is Mexico’s largest airline. Volaris is an ultra-discount airline that has used its low-price strategy to overtake the dominant legacy carrier in that market, Aeromexico.
Volaris’ rise came about thanks to links to prominent Mexican investors along with well-known budget airline investing firm Indigo Partners. Not surprisingly, however, Volaris’ momentum ground to a halt during the pandemic. More recently, uncertainty around industry regulations in Mexico along with a jet engine recall that grounded some of Volaris’ fleet have dinged the firm’s outlook. Regardless, Mexico has enjoyed one of the fastest-growing aviation markets in recent years. And the long-term prospects for Mexican travel are promising amid that country’s manufacturing boom.
VLRS stock has slumped more than 50% since its June 2023 peak. While airlines are rarely compelling buy-and-hold investments, there could be an excellent tactical bullish trade setting up in Volaris shares heading into 2024.
Nice Ltd. (NICE)
Nice is an Israeli applications software company. Historically, it has focused on customer engagement services, specifically in the form of operating software for contact centers and workforce engagement. That segment makes up about 80% of Nice’s revenues, with the rest coming from newer emerging categories within risk management, compliance and fraud prevention services primarily for financial institutions. Additionally, Morgan Stanley’s analyst Meta Marshall recently upgraded NICE stock on the grounds that it can be a leading player in providing conversational artificial intelligence solutions to enterprises. The company is also strongly profitable, selling for less than 17 times forward earnings while offering double-digit top-line growth.
Despite the positives, shares are trading near 52-week lows thanks to the slowdown in enterprise software along with the heightened geopolitical concerns in the Middle East, which could impact Nice’s operations. While risk is elevated today, that’s creating a buy-the-dip opportunity for more aggressive investors.
Bank of Hawaii Corp. (BOH)
Bank of Hawaii is one of the handful regional banks operating in the state of Hawaii. Given that region’s geographic isolation, there is minimal competition from the mainland U.S. banks within Hawaii. This has traditionally led to a stable banking market with high profit margins and a loyal customer base.
Those assumptions came under fire earlier this year amid the regional banking crisis and the sudden collapse of Silicon Valley Bank. Bank of Hawaii has a lot of higher-duration assets on its balance sheet, and thus holds a large amount of paper that has now suffered sizable unrealized losses. Traders initially dumped BOH stock, sending it down nearly two-thirds from its prior highs.
However, as Bank of Hawaii’s deposit base has remained stable and profits keep rolling in, concerns have started to fade. While Bank of Hawaii still has a messy balance sheet, shares go for less than 10 times trailing earnings and the bank’s unique geographic footprint should be a competitive edge once industry conditions normalize.
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6 High-Risk Stocks for Aggressive Investors originally appeared on usnews.com
Update 10/20/23: This story was previously published at an earlier date and has been updated with new information.
