Top 12 High-Risk High Reward Stock Now! 12 Stocks that Will Explode in 2021!
An average investor often believes that investing in the riskiest stock generates high rewards. Unfortunately, this investing mantra is so unreliable; most risky stocks can drop to zero. However, most of the highest rewarding stocks in the past encountered long uncertainty periods before generating high returns.
According to an S&P Global Market Intelligence data analysis conducted by the Investor’s Business Daily, about a fifth of stocks have half a decade beta of 1.5 and above. Meaning their fluctuation levels are 50% higher than the S&P 500. That said, only ten of these stocks made it to 20% and above this year, with the S&P making it to 3.4%.
If you intend to invest in risky S&P stocks in 2021, at least make sure you’re compensated for it. The good news is the roller coaster ride on the stock market is gradually becoming even after its first significant plunge. If you still have a sinking feeling in your belly, relax. This article will take you through 12 high-risk stocks that will explode and have you dancing to the bank in 2021.
Nvidia Corp (NVDA)
Nvidia is one of the riskiest stock that has been yielding high returns. If you’re willing to ride out the volatility, Nvidia shares have had a return on investment of more than 1600% in the five previous years due to the high demand for exclusive business cards. In 2020, Nvidia was up about 60%.
According to Angelo Zino, an analyst, Nvidia’s revenue could continue growing due to high demand from online gaming and data centers. Besides, there will be tailwinds from virtual reality and autonomous vehicles and artificial intelligence. The Center for Financial Research and Analysis (CFRA) has a purchase rating and a target price of $400 for NVDA stock.
According to Kenneth Leon, a financial analyst, this Citigroup is not the same as the one that became bankrupt in 2008. After ten years of building capital, asset sales, and stress tests, Citigroup is flexible enough to navigate the downturn without compromising its dividend. Besides, Citigroup’s holdings are widely diversified compared to other big banks in the U.S. Though there were recessions and zero interest rates, the estimated earnings per share were at $5.10 as of 30th September 2020. They are expected to rise to $ 7 in 2021.
These stocks started trading publicly in history’s largest software IPO in September 2020. Snowflake’s cloud-based platform that analyzes and stores data for large companies captivated significant IPO purchases from Berkshire Hathaway, one of Warren Buffet’s stock, and Salesforce.com, resulting in more than doubled stock on the first trading day.
Due to its tremendous growth rate, investors were dazzled, leading to a revenue surge of 174% in 2020, and an estimate of more than 133% is expected in 2021’s first half. Besides, the customer base significantly increased to more than 3117 by 2020, and it’s currently serving 146 of the largest 500 firms.
Snowflake has all the potential to defy fundamental gravity if it consistently churns out triple-digit growth in revenue and customers; thus, a high-risk, high rewarding stock to invest in.
Ameriprise Financial (AMP)
Ameriprise Financial is an insurance, asset management, and financial planning company. It was highly volatile in 2020, selling from about 180 dollars in February to as low as 82 dollars in March, then shooting up to 163 dollars in June.
According to Cathy Seifert, a financial analyst, AMP is a growth source with a promising expansion ability. AMP stock is undervalued, but the 2.7% investors reward could be riding out the volatility soon enough. In 2021, the expected revenue estimate ranges between 4 and 6 percent. AMP’s buy rating and the price target is 140 dollars.
Boeing Co (B.A.)
Boeing is in a debt of more than 54 billion dollars. In April last year, it received no new orders and canceled 108 orders. You may have uncertainties due to the grounding of Boeing’s 737 Max and the prospective liabilities. Under the circumstances, it may be the riskiest stock to invest in. However, according to Colin Scarola, a financial analyst, the clearance of Boeing 737 by the FAA, which took place in November 2020, could do away with some of your future concerns. Currently, Boeing shares are undervalued. With time, this could be a different narrative. The CFRA buy rating and price target for B.A. stock is 231 dollars.
Beyond Meat (BYND)
Beyond Meat, a pioneer in plant-based meat products started trading publicly in May 2019. Within a short time, it had surged about eight times from its IPO value. It has been exhibiting tremendous growth. With its revenue rising by 239% in 2019 and an extra 96% within the first half of 2020.
Beyond Meat’s significant growth can be associated with its partnership with top retailers and restaurants, including Walmart, Costco, and Yum Brands, responsible for boosting its brand awareness among customers.
This firm is yet to be profitable, but there has been a significant reduction in its net losses in the last two years (2019 & 2020). In 2020, its net revenues were 94.4 million dollars, a 2.7% increase from the previous year. Should it be profitable in 2021, the estimates are valued at 16 times sales and almost 300 times earnings.
While there is steep competition from Impossible Foods and other plant-based meat products, the growth in brand recognition, increased sales, and reduced losses assure you of high rewards if you’re patient enough.
SVB Financial Group (SIVB)
SVB Financial Group is a commercial, financial services firm focusing on life sciences, premium wineries, private equity companies/ venture capital, and technology. In the two previous years, the volatile stock ranged between 333 dollars high and 127 dollars low.
According to Pauline Bell, a financial analyst, the profitability metrics of SVB are above average compared to other regional banks. Besides, its fee generation is promising. Though its profitability was exposed to the recent interest rate cuts, it maintains a high liquidity level and profitable loan growth. CFRA’s buying rate and the price target is $ 190 for SIVB’s stock.
United Rentals (URI)
This is the most extensive construction, utility, and industrial materials rental chain in the world. Its fleet productivity sequentially improved by 560 basis points as a result of better fleet absorption in 2020. According to analyst Elizabeth Vermillion, special projects and non-residential building could drive URI revenue growth in 2021. On the other hand, the demand for industrial and oil and gas is likely to drop significantly. Recent bill proposals of Washington infrastructure ranged between 500 billion dollars and 1 trillion dollars. URI stock has a buy rating from CFRA and a price target of 146 dollars.
This company is the largest producer of copper in the world and among the top ten gold producers. Its shares traded between $ 13.64 and 4.82 in the first half of 2020, a clear illustration of the risk involved if you buy the stock.
However, according to Matthew Miller, a financial analyst, copper’s demand could be significant in 2021. Besides, its property in Indonesia (Grasberg) and Arizona (Lone Star assets) will be Freeport’s growth fundamentals in the next two years. FCX stock has a buy rating on CFRA and a price target of 13 dollars.
Advanced Micro Devices (AMD)
AMD is a multinational semiconductor firm that focuses on developing computer processors and other business and consumer markets. These stocks are even riskier than Nvidia Corp, with a 2.28 five year beta. Its leading stock has a 99 IBD composite rating. In the third quarter of 2020, AMD stock increased by 39% from the last quarter. Funds managers have great faith in AMD’s potential growth.
Lennar Corporation (LEN)
Lennar Corporation is a real estate and home construction company. As you may know, homebuilder stocks are highly volatile and are often at the interest rates and economic cycle mercies. However, they pay their investors so well. With so many people currently working from home, there’s a high demand to pay for a dwelling.
Lennar has a 1.63 five-year beta, and its swings can get so wild. However, it has a composite rating of 95 IBD, thus outperforming 95% of the entire stocks. In 2020, Lennar’s shares value increased by 39%, making the S&P 500 earnings appear insignificant.
D. R Horton, Inc (DHI)
D.R Horton is the U.S. largest homebuilder company. In 2020, DHI benefitted from the high demand for housing facilities. As you’ve read above, homebuilder companies are mostly at the mercy of interest rates and the economic cycle, which brings you to the question; is DHI a buy over the long haul?
Well, by September 2020, DHI net income increased by 47% from the previous period. While D.R Horton may be currently enjoying high markets, the demand might drastically drop with time. To mitigate the fluctuation risks, DHI acquired Braselton Homes to its portfolio. Besides, it has a relatively stable financial position of $2.6 billion in capital.
Investing in DHI might seem risky, but if you’re patient enough, there’s a potential for significant growth with time.
Investing in high-risk ventures requires lots of patient and positivity. While there’s no direct relationship between high risk and high rewards, there’s a positive correlation between a risky investment and the potential for a high return.
Investing with no gain is not pleasing, but if you take a step of faith and invest in the stock mentioned above in 2021, chances are, you will be smiling to the bank later on.