5 High Risk Stocks That Could Have Equally High Rewards
The age-old saying of no pain no gain is true in the world of high risk stocks.
On the one hand, you can go the low risk route and try to protect your hard-earned capital. A lower probability of losing makes some investors feel warm and cozy on the inside. However, there’s still the potential of loss and the gains will rarely-ever be as high.
Alternatively, if you’ve got cash to burn, that’s not needed for your mortgage payments, kids meals, or expensive vinyl record collection habit, then high risk high reward stocks could be worth investigating. You’ll win some, and most definitely lose some going down the high risk investments pathway, but the higher highs might be worth it for some.
DISCLAIMER: High risk stocks aren’t for everyone. Even super-popular brands and international companies can have slumps. Only invest what you can afford to do without. The stocks picked below are purely for investors to review, to do their own due diligence on, and learn about the world of high risk stocks.
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- Shopify is a highly popular stock and might look out of place on this high risk stocks list. However, there’s something lurking in the here and now. SHOP has a stretched valuation.
- At the start of 2020, SHOP was around $400 per share. Now it is over $1000 and climbing. This surge has come after COVID-19, a situation forcing businesses online and potentially using Shopify.
- This stretched valuation at a time of crisis makes buying SHOP high risk today. However, there’s no denying Shopify is a powerhouse and will likely sustain a strong valuation post-COVID-19. The question is, will it sustain its current incredibly high value?
Nvidia Corporation (NVDA)
- Unlike Shopify, which seems to have a major surge post-COVID-19, Nvidia was making moves since late 2018. Climbing from $133.50 to present value.
- So the question is, why is Nvidia a high risk stock option? The simple answer is volatility over short periods. For example, on September 1st, 2020, NVDA was $573.86. On September 7, it was $476.52.
- Despite this volatility, the long-term looks bright for NVDA. With demand for gaming increasing, and branches in Artificial Intelligence, Autonomous Vehicles, and Virtual Reality, there’s plenty of room for continued growth. The risk is getting in at the right time.
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Lululemon Athletica Inc. (LULU)
- While Shopify surged because of COVID-19, established brands like Lululemon took a bit of a hit as consumer spending tightened. The big question is how will they bounce back?
- Some companies like GAP are looking at pulling retail stores. This extreme outlook doesn’t seem mirrored by LULU but there’s a big question over how long COVID-19 will impact malls. Forcing more business to focus on online-only solutions. The flip side to online is that there is only so much consumer attention that can be filled with paid advertising. Meaning some companies will ultimately miss out.
- With all that said, Lululemon’s valuation has gone up since COVID-19. Moving from $165.01 in March 2020 to present value. As this value is above the pre-COVID-19 value of $255.90, there’s a probability that buying this stock now is a higher risk.
The Boeing Company (BA)
- COVID-19 crushed Boeing. It really is that simple. From $330 in February down to the present value. Worst still, it doesn’t look like there will be much improvement any time soon. In fact, there are serious on-going struggles for the aviation industry, and the travel sector as a whole.
- Top these sector-wide issues with the fact that Boeing is in debt to the value of $60-billion, has lost new orders for planes, and all the groundings since COVID-19 and Boeing look to be in big trouble.
- However, this is Boeing. A major brand in a sector government will likely support and sustain. Plus, at some point, COVID-19 will be creating less uncertainty. So travel will be back on many people’s agenda.
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Peleton Interactive, Inc. (PTON)
- At this point you’re probably thinking that we should have called this article ‘Stocks That Are High Risk Because Of COVID-19’ and in all honesty, you’d have a valid point.
- The above is true again with Peleton. When people could get out to the gym, PTON was a sub-$20 stock. In the time it takes COVID-19 to demolish gyms, Peleton has surged to its current value. The question has to be asked, will demand in Peleton fall the moment gyms can be returned to?
- For certain, while people still have real concerns about COVID-19 gyms are doomed, even if they are reopening. This fear might continue to keep PTON on the rise. However, what happens to PTON in a post-vaccine world? It is because of these two big questions that PTON is a super high risk stock — even more so than Boeing.