Volatility is the name of the game in the market lately as investors endure big swings up and down. One day, the Dow Jones Industrial Average is up 2% and the NASDAQ is down 3%. The next day the reverse is true.
Many investors are understandably throwing their hands in the air. Once-reliable technology stocks plunged more than 20% into correction territory. Stocks that were supposed to benefit from the post-Covid economic recovery (airlines, restaurants and resorts) move in fits and starts.
While volatility can be ulcer-inducing, it can also be a way for investors to capitalize on price fluctuations.
Here are 7 of the most volatile stocks investors should actually love:
- GameStop (NYSE:GME)
- BlackBerry (NYSE:BB)
- Tilray (NASDAQ:TLRY)
- Moderna (NASDAQ:MRNA)
- Baidu (NASDAQ:BIDU)
- Novavax (NASDAQ:NVAX)
- Boeing (NYSE:BA)
It probably goes without saying that these picks aren’t for the risk-averse investor. If seeing portfolio numbers dip makes your stomach churn, you might consider our safe stocks to buy for investors allergic to volatility.
Volatile Stocks to Buy: GameStop (GME)
Among volatile stocks, GameStop takes the crown. Since the start of the year, the video game retailer’s stock price has swung from $17.25 to $483.00, down to $40.69, back up to $265.00 and down again to $120.00. Daily swings of 20% or more are common with GME stock.
Now hovering around $180.00 per share, there’s no way of predicting how GameStop will move next. GME could shoot up above $200, or it could crash back down below $20. At this point, nothing would surprise me. That’s how volatile this stock has been since it got caught in a short squeeze in January.
The favorite stock of the Reddit WallStreetBets crowd, GameStop has left a lot of retail investors exhausted and poorer. Of course, those who succeeded in timing the gargantuan swings in GME stock made a lot of money.
So too, have investors who had the foresight to invest in GameStop stock before the short squeeze happened. Investors such as Michael Burry, who bought GameStop at $7 a share last spring and sold at the peak of the squeeze, have made out great. And with volatility continuing in this stock, there may be more money to be made yet.
Canadian technology company BlackBerry is a long way from the heyday of the early 2000s, when it dominated the smartphone market. After being crushed by the advent of the iPhone, BlackBerry pivoted out of the smartphone market and quietly reinvented itself as am enterprise software firm specializing in the Internet of Things (IoT). In 2007, just before the first iPhone was released, BB stock traded at $230 a share. Since 2013, shares have largely traded as a penny stock.
However, a spate of volatility this year has put the spark back into BB stock. In the first three months of 2021, BlackBerry stock has gone from $8 a share up to a peak of $36 before sliding back down to its current level of just over $12. Like GameStop, BlackBerry’s stock was targeted by retail investors on WallStreetBets who frantically pushed the price up; there was no substantial reason for BlackBerry’s stock to rise.
This might explain why BlackBerry Chief Marketing Officer Mark Wilson sold more than $990,000 of BlackBerry stock, and Chief Financial Officer Steve Rai sold nearly $430,000 of the stock on January 20 when the share price closed at $16.15.
The entire cannabis sector has been on a yoyo this year as a growing number of U.S. states move to legalize the recreational drug and investors try to figure out if the Biden administration will move forward with legalization at the federal level as neighboring Canada has done. And riding the roller coaster alongside its sector peers has been Tilray, a Toronto-based company set to become the world’s largest cannabis producer by volume following its upcoming $4 billion merger with fellow cannabis producer Aphria (NASDAQ:APHA).
At the year’s outset, TLRY stock was at $9. By February 10, the share price was up to $67, more than doubling in two trading days. Now the stock is down to $22 a share and inching higher.
The volatility has been tough to stomach for investors who have been patiently waiting for the fledgling cannabis market to advance. Analysts say the current wave of consolidation among cannabis companies is healthy and will help the industry mature.
But until there’s some clear indicators out of Washington, D.C., regarding where lawmakers stand on legalization, expect volatility to persist.
You’d think that the stock of Boston-based pharmaceutical company Moderna would be doing great right now. The company is rolling out its Covid-19 vaccine around the world and recently reported earnings that blew away the consensus expectation of analysts.
With a number of lucrative vaccine contracts signed, Moderna reported that its revenue in the fourth quarter of 2020 swelled to $570.7 million from just $14.1 million in the same period a year earlier. Analysts had expected fourth quarter revenue of just $279.4 million. Moderna ended the fourth quarter of 2020 with cash and investments of $5.25 billion, five times what it was in the same period of 2019.
While Moderna still reported a net loss in the fourth quarter, that was mostly due to spending on Covid-19 vaccine distribution and accounting reconciliations. By most measures, Moderna’s business is booming and its patented Messenger RNA vaccine is being hailed as a major medical breakthrough with far-reaching applications going forward.
Yet the price chart for MRNA stock looks a lot like a heart monitor. Moderna’s stock price has jumped from $109 to $189.26, back down to $123.47 and then up to $156.02. The share price is now $133.33.
The volatility seems to be based on how global vaccinations against Covid-19 are going. Any hiccups reported send Moderna stock down, while any progress gives the stock a boost.
Things were looking so exciting for Chinese Internet and artificial intelligence company Baidu heading into this year. BIDU stock got a big lift in January and February after the company announced plans to establish an electric vehicle company.
Baidu’s share price rose 74% from $203 to $354.82. The stock was one of the best performing on the NASDAQ index by mid-February.
But the rotation out of technology stocks and into industrial and cyclical securities, along with political tensions between Beijing and Washington have caused the stock to crater. Today, BIDU stock is trading at $204, right around where it was at the start of 2021. All of the stock’s gains this year have been effectively wiped out.
Baidu’s share price fell 14.5% in one day on March 25 after U.S. regulators moved forward with plans to strengthen the audit and accounting requirements imposed on Chinese companies that are listed on U.S. stock exchanges. The Securities and Exchange Commission (SEC) is implementing the “Holding Foreign Companies Accountable Act” which will remove Chinese companies from U.S. exchanges if they fail to comply with American audit standards for three consecutive years.
Other Chinese stocks fell on the news, but none fell as much as Baidu.
Like Moderna, pharmaceutical company Novavax has seen its stock price see-saw over news of the Covid-19 vaccine roll out. NVAX stock nearly tripled between January 4 and February 8 on news that the company was filing for emergency use authorization of its Covid-19 vaccine with the U.S. Food and Drug Administration (FDA).
Reports suggest Novavax’s vaccine could receive FDA approval by May of this year. But after peaking at $331.68, the stock has dropped, risen, dropped and risen again. It’s now changing hands at $178.23 a share.
NVAX stock was further hurt on recent reports that an independent director of the company sold 40% of his shares in the company, and also that the company is experiencing production delays of its Covid-19 vaccine due to trouble sourcing raw materials. These production problems have prevented Novavax from signing a contract to supply its Covid-19 vaccine to the European Union, which was hoping to secure 100 million doses from the company.
Hopefully Novavax can get its operations and share price back on track by the summer.
After its 737 MAX 8 aircraft were grounded by governments around the world following two terrible crashes, things finally began to look up for Boeing entering 2021. The 737 MAX 8 has been cleared to fly again in multiple countries and Boeing has succeeded in signing new orders for its various commercial aircraft.
Its share price responded positively. BA stock rose 43% through March 12 when it peaked at $278.57. It has since fallen 14% before rebounding a little bit to its current price of $247.19 a share.
As a cyclical and industrial stock, Boeing is sensitive to news of the economic reopening and Covid-19 resurgence. BA stock also took a hit on recent news that the company lost out on a multi-billion dollar defense contract with the Pentagon to rivals Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC).
Investors remain on high alert with Boeing stock. And the volatility will continue until the economic recovery is fully underway. Strong earnings moving forward should also help to instill confidence in shareholders and new investors alike.
On the date of publication, Joel Baglole held long positions in BIDU and NVAX.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.