Nothing ventured, nothing gained. This saying can certainly be applied to the stock market. Every time investors pick stocks to buy with their hard earned money, they must determine if the risk is worth the potential reward. And some stocks are certainly more risky (and volatile) than others.
While there are many blue-chip stocks that are stable, steady and reliable, there are many other securities that are prone to wild highs and lows that require investors to stay on their toes and act quickly when big swings happen. And it is often the riskiest stocks that end up delivering the biggest rewards in the end. Here we take a look at four high-risk, high-reward stocks to buy if you’re looking to take a bet.
My four top picks are:
- Virgin Galactic (NYSE:SPCE)
- Plug Power (NASDAQ:PLUG)
- Riot Blockchain (NASDAQ:RIOT)
- ARK Innovation ETF (NYSEARCA:ARKK)
High-Risk, High-Reward Stocks to Buy: Virgin Galactic (SPCE)
Repeated delays and a lack of any significant revenue have hurt Virgin Galactic’s stock price. The spaceflight company based in Mojave, California that promises to fly tourists to the outer edges of Earth’s orbit has seen its share price fall around 66% since early February as tests of its spacecraft have been pushed back.
At its current price of $25.37, SPCE stock is today at about the same level it was at last summer shortly after its stock market debut via a special purpose acquisition company (SPAC) deal.
The fact that company founder, Sir Richard Branson, has been selling SPCE stock hasn’t helped the share price. Neither have analysts openly questioning whether space tourism will actually take off. At $250,000 per trip, flying into space is out of most people’s reach. But despite the difficulties, there is reason for optimism. Virgin Galactic just completed its first spaceflight in more than two years, and on May 21, UBS investment bank upgraded Virgin Galactic’s stock to a “buy” rating from “neutral” previously.
Plug Power (PLUG)
It’s never good when a company has to restate its earnings. But that is exactly what Latham, New York-based Plug Power has just completed. The company that is focused on developing hydrogen fuel cell systems that could, potentially, revolutionize electric vehicles has restated its financials for fiscal years 2018 and 2019, as well as quarterly statements for 2020.
News of the restatements hasn’t helped PLUG stock, which has spiraled down as low as 76% from its high over the past few months, bottoming at $18.47 per share on May 11.
But now, PLUG stock looks to be on the rebound. Conclusion of the financial restatements has led to the share price rising around 40% in short order. Plug Power stock now trades at $26.87. Wall Street appears to want to believe in the company and the market opportunity of hydrogen fuel cells, which has been pegged at anywhere from $200 billion to $10 trillion.
While the future might seem bright, investors should remember that Plug Power remains unprofitable, although the company has forecast sales of $475 million this year, $750 million in 2022 and $1.7 billion by 2024.
High-Risk, High-Reward Stocks to Buy: Riot Blockchain (RIOT)
The price of cryptocurrencies continues to fluctuate wildly, and they’re taking shareholders of Riot Blockchain along for the ride. As one of the leading Bitcoin (CCC:BTC-USD) mining companies in the world, Riot Blockchain’s stock tends to move in tandem with the biggest digital coin. And as the price of Bitcoin swung high and low over the past week, so too did RIOT stock.
Since May 12, RIOT stock has gone up and down repeatedly. It’s made some stomach-churning moves that require investors to have nerves of steel.
Yet if Bitcoin and other crypto assets settle down or move sharply higher, RIOT stock can be expected to follow suit. With some people on Wall Street forecasting that Bitcoin could reach $100,000, or even $500,000 per coin, Riot Blockchain could prove to be a worthwhile long-term investment. In the meantime, investors brave enough to hold a position in Riot Blockchain stock will have to endure the extreme volatility that comes with exposure to cryptocurrencies.
Ark Innovation ETF (ARKK)
The Ark Innovation exchange-traded fund (ETF) was one of the best performers in 2020. The fund that is loaded with large-cap and speculative technology stocks ranging from Tesla (NASDAQ:TSLA) and Roku (NASDAQ:ROKU) to Zoom Video (NASDAQ:ZM) and Coinbase (NASDAQ:COIN) rose around 150% between May of last year and mid-February of this year.
However, since investors began rotating out of technology stocks and into value and cyclical names, ARKK has tanked, dropping 35% to its current price of $109.50. More than $1.1 billion of fund flows have left the Ark Innovation ETF so far in the month of May.
And yet, Ark Invest Chief Executive Officer Cathie Woods remains defiant and is sticking by her strategy of using the Ark Innovation ETF to invest in disruptive and leading edge technologies. During the current sell-off of technology stocks, Woods has been buying more shares for the ARKK ETF. As prices fall, Woods and her team have been snapping up more share of companies such as Coinbase and Tesla. If she’s right, Woods’ strategy of buying the dip could pay off handsomely for investors in the Ark Innovation ETF when the inevitable move back into tech stocks occurs.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.
