Are you looking for alluring stocks that are somewhat risky?
While low-risk investments such as mutual funds, treasury bonds, and index funds may offer a modest return, it’s a return nonetheless. Between 1957 and 2021, the S&P 500 index has returned 11.88% annually on average.
However, investors sometimes search for more daring options that offer future massive return potential. Expect to weather storms though, since varying events can affect the underlying share price. Keep in mind that with high risk comes high reward.
Let’s examine three stocks that offer the possibility of significant future returns due to their projected profitability and/or business model. As with most risky stocks, they experience massive share swing prices.
Rolls Royce Holdings (RYCEY)
London-based Rolls-Royce Holdings (OTC:RYCEY) is an aerospace and defense company. It primarily markets, manufactures, and sells military aircraft engines and other aftermarket services. The civil aerospace industry creates aircraft for commercial, regional, and business use, as well as provides power generation solutions for nuclear and utilities industries.
Over the past year, share price has seen a significant increase, more than tripling. Recently, RYCEY is enjoying the benefit due to increased airline travel, which has led to higher demand for new aircraft. Further, leadership changes have occurred this year. Most notably, the company appointed new CEO Tufan Erginbilgic, previously from BP (NYSE:BP).
Rolls-Royce reported half-year earnings results which stated an increase in revenue of 31% compared to prior year. Operating profits rose fivefold. This overall increase was thanks to higher revenue from its civil aviation segment, robust cash flow, and a faster-than-expected product delivery timeline.
Vita Coco (COCO)
Vita Coco (NASDAQ:COCO) is a leader in production, distribution, and sale of coconut water products in the U.S. and abroad. Its products primarily include Hydration Drink Mix (a powdered mix of coconut water), PWR LFT (their heavily-branded fitness drink) and a plant-based energy drink called Runa.
Since its 2021 IPO date, it was trading at $13.52 but has since doubled in share price. Vita Coco reported Q1 earnings results, revealing a 14% increase in overall net sales on top of net income that tripled to $6.7 million year over year (YOY). Their flagship product, Vita Coco Coconut Water, saw YOY sales growth of 17%.
The future forecast for the remaining year states a projected total sales growth of 9-12%. Also, their coconut water is expected to continue its similar growth rate of nearly 15%.
GigaCloud Technology (GCT)
GigaCloud Technology (NASDAQ:GCT) is a B2B e-commerce company that provides distribution services for large merchandise such as appliances, furniture, and fitness equipment.
Year-to-date (YTD) GigaCloud share price is up 92%. But recently, the stock has fallen 40% from a high of $17.73 per share. This price drop was due to GCT entering into a definitive agreement with Noble House Home Furnishing, an indoor and outdoor furniture supplier. The deal was in connection with Noble’s Chapter 11 bankruptcy proceeding in which GigaCloud would purchase their remaining assets for approximately $85 million in cash.
Overall, investors weren’t happy about this move because it requires a decent portion of their cash. GigaCloud stated that this deal will increase potential to their business model.
As of this writing, Noah Bolton held long positions in COCO and GCT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
