In this article, we discuss the 16 most volatile stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Most Volatile Stocks To Buy Now. The economy of the United...
In this article, we discuss the 16 most volatile stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Most Volatile Stocks To Buy Now.
The economy of the United States is deeply linked to the stock market of the country. Both the economy and the stock market have battled recession fears over the past few months, leading to a slowdown in the economy and increased volatility at the market. However, as interest rates stabilize, inflation cools, and growth picks up again, there is increased optimism around a soft landing for the US economy, leading to the emergence of a bull market on Wall Street. The benchmark S&P 500 is close to hitting a record high and up is over 24% so far this year.
One particular trend that investors should keep in mind before investing in stocks is that over the past few months, even though the threat of a market crash loomed large over the US economy, companies like Tesla, Inc. (NASDAQ:TSLA), Block, Inc. (NYSE:SQ), and Shopify Inc. (NYSE:SHOP) continued to outperform peers, generating record revenues and ratcheting up impressive growth numbers. This duality has led to increased volatility that shrewd investors can take advantage of before the economy normalizes again.
The story of Tesla, Inc. (NASDAQ:TSLA) is particularly compelling in this regard. Tesla, Inc. (NASDAQ:TSLA) stock, one of the most popular and volatile on the market, has returned more than 129% to investors this year, and is up over an astonishing 1,073% in the past five years. The company remains on track to deliver record vehicles this year, although analysts expect it to fall short of the 2 million annual delivery target. Tesla, Inc. (NASDAQ:TSLA) has leveraged industry-leading margins to slash prices of cars to achieve these targets.
According to a report by news agency Reuters, the California-based EV maker delivered 1.82 million vehicles globally in 2023, up 37% from 2022, with about 473,000 units in the fourth quarter. However, per owner Elon Musk, high borrowing costs led to demand pressures that slowed down deliveries. Tesla, Inc. (NASDAQ:TSLA) aims to achieve a growth rate of over 50% annually. As other EV makers roll back electrification plans due to slowing demand, Tesla, Inc. (NASDAQ:TSLA) is ramping them up.
Vaibhav Taneja, the CFO of Tesla, Inc. (NASDAQ:TSLA), talked about some of these plans alongside Elon Musk during the third quarter earnings call. Taneja noted that this year, the firm had generated operating cash flows of approximately $8.9 billion and free cash flows of approximately $2.3 billion. He added that other businesses of the firm were becoming more prominent on a stand-alone basis with the energy business leading the charge primarily from the growth in megabyte deployments.
“Vehicle deliveries in Q3 outpaced production, and we had yet another record quarter of profitability in our Energy business. Congratulations to the Tesla team for their continued focus on operational excellence as we navigate through a period of economic uncertainty, higher interest rates, and shifting consumer sentiment. As Elon mentioned, our Q3 operational and financial performance was impacted by planned downturns for our factory upgrades.
This was necessary to allow for further factory improvements and production rate increases. Despite those factory shutdowns, our cost per vehicle decreased to approximately $37,500. We saw sequential decreases in material costs and freight. Reducing the cost of our vehicles is our top priority.
On the operating expenses front, R&D expenses continue to rise due to Cybertruck prototype builds and pilot production testing combined with spend on AI technologies like full self-driving Optimus and Dojo. We have and will continue to make investments in these areas and hence, our capital expenditure and R&D will continue to grow in the near term. However, our focus is to continue making investments through positive cash flow from operations. This year itself we have generated operating cash flows of approximately $8.9 billion and free cash flows of approximately $2.3 billion.”
Our Methodology
The companies that have a beta of greater than 2 were shortlisted. Those with market capitalizations of more than $1 billion were then selected and ranked according to hedge fund sentiment. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
A graph plotting the trends and performance of stocks on the public equity markets.
Most Volatile Stocks To Buy Now
16. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 18
Beta Rating as of December 30: 2.02
NIO Inc. (NYSE:NIO) designs, develops, manufactures, and sells smart electric vehicles in China. On December 6, investment advisory Bank of America maintained a Buy rating on NIO Inc. (NYSE:NIO) stock and lowered the price target to $11 from $13.
At the end of the third quarter of 2023, 18 hedge funds in the database of Insider Monkey held stakes worth $156 million in NIO Inc. (NYSE:NIO), compared to 19 in the preceding quarter worth $120 million.
Just like Tesla, Inc. (NASDAQ:TSLA), Block, Inc. (NYSE:SQ), and Shopify Inc. (NYSE:SHOP), NIO Inc. (NYSE:NIO) is one of the most volatile stocks to buy now.
15. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 20
Beta Rating as of December 30: 4.95
QuantumScape Corporation (NYSE:QS) focuses on the development and commercialization of solid-state lithium-metal batteries for electric vehicles and other applications. On December 18, investment advisory Willaim Blair initiated coverage of QuantumScape Corporation (NYSE:QS) stock with a Market Perform rating.
At the end of the third quarter of 2023, 20 hedge funds in the database of Insider Monkey held stakes worth $83 million in QuantumScape Corporation (NYSE:QS), compared to 17 in the previous quarter worth $47 million.
14. Opendoor Technologies Inc. (NASDAQ:OPEN)
Number of Hedge Fund Holders: 20
Beta Rating as of December 30: 2.78
Opendoor Technologies Inc. (NASDAQ:OPEN) operates a digital platform for residential real estate in the United States. On December 20, investment advisory Citi maintained a Neutral rating on Opendoor Technologies Inc. (NASDAQ:OPEN) stock and raised the price target to $4.5 from $2.2.
At the end of the third quarter of 2023, 20 hedge funds in the database of Insider Monkey held stakes worth $138 million in Opendoor Technologies Inc. (NASDAQ:OPEN), compared to 25 in the preceding quarter worth $333 million.
13. Sunrun Inc. (NASDAQ:RUN)
Number of Hedge Fund Holders: 26
Beta Rating as of December 30: 2.56
Sunrun Inc. (NASDAQ:RUN) develops and installs residential solar energy systems. On December 19, investment advisory Piper Sandler upgraded Sunrun Inc. (NASDAQ:RUN) stock to Overweight from Neutral and raised the price target to $31 from $15.
Among the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in Sunrun Inc. (NASDAQ:RUN) with 13.9 million shares worth more than $175 million.
12. MP Materials Corp. (NYSE:MP)
Number of Hedge Fund Holders: 26
Beta Rating as of December 30: 2.52
MP Materials Corp. (NYSE:MP) owns and operates rare earth mining and processing facilities. On November 6, investment advisory Deutsche Bank maintained a Hold rating on MP Materials Corp. (NYSE:MP) stock and lowered the price target to $18 from $24.
At the end of the third quarter of 2023, 26 hedge funds in the database of Insider Monkey held stakes worth $200 million in MP Materials Corp. (NYSE:MP), compared to 27 in the previous quarter worth $264 million.
11. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 27
Beta Rating as of December 30: 3.23
Coinbase Global, Inc. (NASDAQ:COIN) provides financial infrastructure and technology for the crypto economy. On December 22, investment advisory JPM Securities maintained an Outperform rating on Coinbase Global, Inc. (NASDAQ:COIN) stock and raised the price target to $200 from $107.
At the end of the third quarter of 2023, 27 hedge funds in the database of Insider Monkey held stakes worth $1.23 billion in Coinbase Global, Inc. (NASDAQ:COIN), the same as in the preceding quarter worth $1.28 billion.
10. Herc Holdings Inc. (NYSE:HRI)
Number of Hedge Fund Holders: 28
Beta Rating as of December 30: 2.40
Herc Holdings Inc. (NYSE:HRI) operates as an equipment rental supplier. On October 25, Wells Fargo analyst Seth Weber maintained an Overweight rating on Herc Holdings Inc. (NYSE:HRI) stock and lowered the price target to $150 from $165.
At the end of the third quarter of 2023, 28 hedge funds in the database of Insider Monkey held stakes worth $578 million in Herc Holdings Inc. (NYSE:HRI), compared to 32 in the previous quarter worth $598 million.
9. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 31
Beta Rating as of December 30: 2.65
Ovintiv Inc. (NYSE:OVV) markets oil and natural gas. On December 6, JPMorgan analyst Arun Jayaram upgraded Ovintiv Inc. (NYSE:OVV) stock to Overweight from Neutral and lowered the price target to $58 from $61.
At the end of the third quarter of 2023, 31 hedge funds in the database of Insider Monkey held stakes worth $730 million in Ovintiv Inc. (NYSE:OVV), compared to 24 in the previous quarter worth $276 million.
In its Q3 2023 investor letter, Patient Capital Management, an asset management firm, highlighted a few stocks and Ovintiv Inc. (NYSE:OVV) was one of them. Here is what the fund said:
“Ovintiv Inc. (NYSE:OVV) reversed its trend from the first half of the year climbing 25.6% in the quarter as commodity prices caught a bid. The company is benefiting from increases in production due to improved well productivity across its portfolio combined with a lower level of maintenance capex. 40% of oil and 50% of gas exposure is hedge for the next twelve months providing insulation from fluctuations in commodity prices. Ovintiv continues to allocate 50% of post-dividend free cash flow (FCF) to debt paydown, and 50% to shareholder returns via either dividends or buybacks.”
8. Fluor Corporation (NYSE:FLR)
Number of Hedge Fund Holders: 31
Beta Rating as of December 30: 2.14
Fluor Corporation (NYSE:FLR) provides construction and engineering services.On November 14, investment advisory Barclays maintained an Equal Weight rating on Fluor Corporation (NYSE:FLR) stock and raised the price target to $39 from $30.
At the end of the third quarter of 2023, 31 hedge funds in the database of Insider Monkey held stakes worth $718 million in Fluor Corporation (NYSE:FLR), compared to 32 in the preceding quarter worth $518 million.
7. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 31
Beta Rating as of December 30: 2.68
Palantir Technologies Inc. (NYSE:PLTR) builds and deploys software platforms for the intelligence community in the United States. On November 2, investment advisory Goldman Sachs maintained a Neutral rating on Palantir Technologies Inc. (NYSE:PLTR) stock and raised the price target to $12 from $11.
At the end of the third quarter of 2023, 31 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Palantir Technologies Inc. (NYSE:PLTR), compared to 39 in the previous quarter worth $987 million.
6. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Holders: 41
Beta Rating as of December 30: 2.12
Cleveland-Cliffs Inc. (NYSE:CLF) operates as a steel producer. In late September, investment advisory B Riley maintained a Buy rating on Cleveland-Cliffs Inc. (NYSE:CLF) stock and lowered the price target to $25 from $26.
At the end of the third quarter of 2023, 41 hedge funds in the database of Insider Monkey held stakes worth $741 million in Cleveland-Cliffs Inc. (NYSE:CLF), compared to 37 in the preceding quarter worth $425 million.
In addition to Tesla, Inc. (NASDAQ:TSLA), Block, Inc. (NYSE:SQ), and Shopify Inc. (NYSE:SHOP), Cleveland-Cliffs Inc. (NYSE:CLF) is one of the most volatile stocks to buy now.
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