Growth stocks are indisputably heating up on Wall Street. In a recent CNBC article, the financial news outlet suggested that “retail investors” are responsible for the surge. But I see many large investors buying growth stocks, too. For example, George Soros jumped into Tesla (NASDAQ:TSLA) stock last quarter, while Warren Buffett bought millions of Apple’s (NASDAQ:AAPL) shares. Although Apple may not be a classic growth stock, it’s definitely not a value name at its current levels, and it does have some characteristics of a growth stock. Even Michael Burry, who’s supposed to be an uber-bear, got into the act in the fourth quarter, snapping up the shares of MGM (NYSE:MGM), the giant Las Vegas casino operator and Chinese e-commerce gorillas JD.com (NASDAQ:JD) and Alibaba (NYSE:BABA). So with the big money starting to buy growth stocks and the Fed projecting the economy to grow an impressive 2.5% this quarter (my new mantra is: “Don’t fight the Fed’s GDP forecast), I believe that risk-tolerant investors can look for speculative stocks to buy.
Even when it comes to super speculative stocks to buy, I advise buying names that are very well-positioned to benefit greatly from ongoing, strong trends. All of the stocks below fit that criterion.
Speculative Stocks to Buy: Materion (MTRN)
Materion (NYSE:MTRN) develops “advanced engineered materials used in semiconductor, industrial, aerospace and defense, automotive, energy, consumer electronics, and telecom and data centers.”
Among its more prominent products are metal alloys that connect the electrical components of airplanes, tiny materials that make semiconductors faster, and various materials used in the advanced systems of automobiles. The company also makes metals used in electric vehicles and satellites.
MTRN is well-positioned to benefit from many current, strong trends, including the acceleration of air travel and the strong outlook for airplane purchases, the increased use of satellites, the proliferation of electric vehicles, and the internet of things which will require many more semiconductors.
Encouragingly, last quarter, Materion’s earnings per share, excluding certain items, jumped 32% year-over-year to a record $1.49. while the stock gets an “A+” grade on Accumulation and Distribution from Investor’s Business Daily, showing that many institutional investors have been buying its shares over the last 13 weeks.
Magnite (NASDAQ:MGNI) is an advertising platform that specializes in serving the connected TV and internet sectors. Specifically, its platform enables TV and internet content providers to sell their ads automatically to marketers.
A slowdown of the digital ad sector has weighed on MGNI stock, as the shares, which closed at $13.76 on Feb. 17, have tumbled a long way from their all-time high of $61.70 reached two years ago. But streaming TV last month accounted for 37.6% of all TV viewing, and its share of the TV sector continues to grow. That’s certainly positive for MGNI since it generates a great deal of revenue from streaming ads. Indeed, in the third quarter of last year, streaming advertising accounted for 44% of its top line.
Moreover, the digital ad slowdown was caused primarily by companies’ worries about an impending recession. But with the Fed predicting that the U.S. economy will grow a robust 2.5% and infrastructure spending poised to surge, a recession is not on the horizon.
As more companies realize that, the digital ad space should recover, lifting Magnite’s financial results and MGNI stock. Thus, it is one of the top speculative stocks to buy.
Lithium Americas (LAC)
After a federal judge largely rejected a lawsuit that sought to prevent Lithium Americas (NYSE:LAC) from building a large lithium mine in Nevada, the company will probably be able to develop the mine, which is expected to start turning out lithium in 2026. However, LAC may have to contend with an appeal of the ruling, and it does have to resolve a technical question of where it can dump the waste from the mine.
Meanwhile, its Argentine mine is slated to soon start generating $1.4 billion of revenue annually, enabling it to develop still other mines in the region.
Also significant is the company’s recently announced deal with General Motors (NYSE:GM). Under the agreement, GM will invest $650 million in LAC. Those funds will help the company develop its mines, and GM will use the lithium from LAC’s Nevada mine in its EVs.
With the demand for lithium booming and the deal with GM helping LAC on both the production and demand sides, LAC looks like an excellent speculative investment.
Despite all of those positive catalysts, its market capitalization of $3.2 billion remains relatively low, giving it much room to climb. That makes it among the best speculative stocks to buy in my book.
In the third quarter of 2022, a record 1.57 gigawatts of solar power was added to American homes, representing a 43% jump versus the same period a year earlier. With the new, higher tax credit for residential solar instituted this year and residential electricity prices continuing to trend higher, Sunrun (NASDAQ:RUN), which specializes in installing residential solar energy systems in the U.S., should benefit from the latter trend.
Despite the stock market’s rally, RUN sank 12% last month. The selloff was likely triggered by worries about the impact of California’s new, less generous payments to the owners of residential solar systems who send excess electricity to the state’s grid.
But in a December report, research firm Wood McKenzie stated, “The fundamentals for residential solar are strong – customers crave energy independence and savings from a solar system, particularly as retail power prices increase.” The firm expects residential solar demand to remain strong through the first three quarters of this year but predicts that demand will drop 3% in 2024 due to California’s change.
Still, I believe Wood McKenzie is underestimating the positive impact of the tax breaks, continued higher electricity prices, and EV proliferation on the U.S. residential solar market. Therefore, I expect the demand for residential solar installation to jump at least 10% in 2024.
RUN is changing hands for slightly over two times analysts’ average 2023 sales estimate, making the shares attractive at their current levels.
Allegro MicroSystems (ALGM)
Allegro MicroSystems (NASDAQ:ALGM) develops specialized, integrated circuits that meet the needs of the automotive, industrial, and infrastructure sectors. The company reports that it has developed chips that “sense, regulate and drive a variety of mechanical systems.” Among the functions enabled by its chips are ” sensing angular or linear position, driving an electric motor or actuator, and regulating the power applied to sensing and driving circuits so they operate safely and efficiently.”
According to Allegro, its technology increases the range of electric vehicles and makes them safer. Its chips enable greater automation and reduced power usage for the company’s industrial, data center, renewable energy, and infrastructure customers.
Therefore, ALGM is well-positioned to benefit from many strong, current trends, including the proliferation of electric vehicles and renewable energy and the accelerating development of factories in the U.S., a trend known as “onshoring.”
In the company’s fiscal third quarter, its revenue soared 33% year-over-year to $249 million. ALGM has an Accumulation/Distribution score of A+ from Investor’s Business Daily, showing that many institutional investors have bought its shares over the last 13 weeks. In my opinion, these details make ALGM among the best speculative stocks to buy.
As I noted in a previous column, iCAD’s (NASDAQ:ICAD) products use artificial intelligence to detect breast cancer, and the company has launched a partnership with Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL). Under the deal, “Google Health’s AI will be incorporated “into iCAD’s portfolio of breast imaging AI solutions.'”
The deal should validate iCAD’s technology and incentivize Google to use its marketing power to sell iCAD’s products.
Encouragingly, recent evidence suggests that the Street may be starting to become excited about ICAD stock. Specifically, within the framework of “the BTIG Snowbird MedTech, Digital Health, Life Science & Diagnostic Tools Conference,” held from Feb. 14-16, iCAD CEO Stacey Stevens was slated to “participate in one-on-one meetings with investors.”
On Feb. 13, ICAD stock closed at $2. Since then, it has jumped nearly 15%, closing at $2.29 on Feb. 17. The rally of ICAD stock occurred even as the stock market was treading water for several days before sinking on Feb. 17.
In November, Biologics, a Seeking Alpha columnist, added ICAD to its “Bio Boom Speculative portfolio, citing its low valuation and its potential to become “a strong competitor in medical technologies.”
As I reported previously, Stem (NYSE:STEM) uses AI technology to reduce the power consumption of companies that utilize renewable energy.
The company recently reported strong fourth-quarter growth and expects its EBITDA, excluding certain items, to become positive this year.
Specifically, Stem’s top line soared 194% year-over-year to $156 million in Q4, and the company expects its adjusted EBITDA to become positive in the second half of this year. Moreover, STEM recently launched a partnership with ChargePoint (NYSE:CHPT), the leading operator of EV chargers in North America, that should prove to be a very lucrative game changer for STEM stock.
As often happens with the Street, it focused on the trees instead of the forest when it came to STEM’s results, fixating on the fact that the company’s top line came in $10 million below analysts’ average estimate and the fact that its guidance was also slightly below their mean outlook.
But STEM is unquestionably growing rapidly and moving towards profitability, while its overall opportunity remains huge, given the proliferation of renewable energy and EVs. Thus, this is one of the best speculative stocks to buy.
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As of the date of publication, Larry Ramer owned shares of STEM, MGM, and ICAD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Artificial Intelligence, Battery, Industrial, Lithium, Communications, Media, Precious Metals, Energy, Renewable Energy, Semiconductor, Software, Solar, Technology