In late July, investment bank JPMorgan increased the year-end S&P 500 Index price target to 4,600 from 4,400, appearing to dismiss concerns around inflation, regulatory crackdowns, and the threat of another coronavirus crisis resulting from the spread of a new variant of the disease. The bank expressed confidence in the ability of the vaccines to weather the storm and predicted that strong earnings and capital returns would help lift the market to new highs through to 2023. The bank further forecast that the market would benefit from corporate share buybacks too.
The duality presented by the threat of a market crash on one hand and the exceptional performance of the biggest firms on the other has resulted in increased stock volatility in recent weeks. Some of the most volatile stocks on the market presently are Alibaba Group Holding Limited (NYSE: BABA), Micron Technology (NASDAQ: MU), and Square, Inc. (NYSE: SQ), among others. These are discussed in detail below. Investors should take heart from the JPMorgan outlook on the economy and spend wisely to take advantage of this price volatility.
As more companies post their quarterly earnings this week, investors should expect more volatility in stock prices, although it remains to be seen whether this volatility will tilt towards a bull or bear prediction for the overall market. The pace of technological innovation, one of the many reasons why stock volatility has increased over the past few years, has disrupted many sectors of the market, including the finance world. Even established financial institutions are finding it hard to predict future market direction at this point.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 29th 2021 our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 15 most volatile stocks to buy now. These were ranked keeping in mind analyst ratings, hedge fund sentiment, and basic business fundamentals. Some of the firms on the list do not have positive ratings because of bleak outlook, earnings misses, and a Chinese government crackdown against dual-listed businesses. However, they still have a positive long-term outlook.
These stocks were chosen based on their trading volumes and the percentage changes in share price over the past day. Firms with high trading volumes and high share price percentage change were given preference.
Most Volatile Stocks To Buy Now
15. Cassava Sciences, Inc. (NASDAQ: SAVA)
Number of Hedge Fund Holders: 5
Cassava Sciences, Inc. (NASDAQ: SAVA) is placed fifteenth on our list of 15 most volatile stocks to buy now. The company operates as a biotechnology firm focusing on the development of drugs for the treatment of neurodegenerative diseases. It was founded in 1998 and has a market cap of over $2.7 billion. The firm recently released positive data from a study into a drug it is developing to treat Alzheimer's.
On July 20, investment advisory HC Wainwright maintained a Buy rating on Cassava Sciences, Inc. (NASDAQ: SAVA) stock and raised the price target to $124 from $97, noting that drugs in the development pipeline could present a positive catalyst for the stock in the coming months.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Cassava Sciences, Inc. (NASDAQ: SAVA) with 282,793 shares worth more than $12.7 million.
Just like Alibaba Group Holding Limited (NYSE: BABA), Micron Technology (NASDAQ: MU), and Square, Inc. (NYSE: SQ), Cassava Sciences, Inc. (NASDAQ: SAVA) is one of the most volatile stocks to buy now.
14. Riot Blockchain, Inc. (NASDAQ: RIOT)
Number of Hedge Fund Holders: 12
Riot Blockchain, Inc. (NASDAQ: RIOT) is ranked fourteenth on our list of 15 most volatile stocks to buy now. The firm focuses on cryptocurrency mining operations and is based in Colorado. It has a fleet of over 7,000 miners, making it one of the largest coin mining operations in North America. Amid a crackdown on crypto-related firms in China, analysts have backed the share price of the company to soar higher as the firm could capitalize and establish itself as leader in the coin mining industry as Chinese firms falter.
On July 29, investment advisory BTIG initiated coverage of Riot Blockchain, Inc. (NASDAQ: RIOT) stock with a Buy rating and a price target of $45, identifying the firm as a leader in the coin mining sector that controlled close to 2.5% of global mining capacity.
13. Virgin Galactic Holdings, Inc. (NYSE: SPCE)
Number of Hedge Fund Holders: 17
Virgin Galactic Holdings, Inc. (NYSE: SPCE) is placed thirteenth on our list of 15 most volatile stocks to buy now. The firm is based in New Mexico and markets human spaceflight services. The owner of the firm, Richard Branson, recently made headlines by traveling to the edge of space in a spacecraft developed by the firm. The company has a market cap of over $7 billion and is one of the most mentioned stocks on internet forums like Reddit and StockTwits. The short interest on the stock is over 20%.
On July 12, investment advisory Canaccord reiterated a Buy rating on Virgin Galactic Holdings, Inc. (NYSE: SPCE) stock and raised the price target to $48 from $35, noting that the pullback in the share price of the firm over recent weeks represented a buying opportunity.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Virgin Galactic Holdings, Inc. (NYSE: SPCE) with 2.8 million shares worth more than $86 million.
12. XPeng Inc. (NYSE: XPEV)
XPeng Inc. (NYSE: XPEV) is a company that markets smart electric vehicles. It is headquartered in China and is ranked twelfth on our list of 15 most volatile stocks to buy now. On August 1, the firm announced vehicle delivery results for the month of July, reporting monthly deliveries of over 8,000 smart electric vehicles, the highest ever delivered in a month by the firm and representing an increase of 228% year-on-year 22% compared to the deliveries in the previous month.
On July 2, investment advisory Citi raised the price target on XPeng Inc. (NYSE: XPEV) stock to $56.3 from $50.3 and maintained a Buy rating, noting the uptick in shipments in June and a successful IPO in Hong Kong as positive growth catalysts for the firm.
At the end of the first quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $976 million in XPeng Inc. (NYSE: XPEV), down from 30 the preceding quarter worth $820 million.
11. ContextLogic Inc. (NASDAQ: WISH)
Number of Hedge Fund Holders: 25
ContextLogic Inc. (NASDAQ: WISH) is placed eleventh on our list of 15 most volatile stocks to buy now. The firm owns and runs a mobile ecommerce business that operates across the globe. The stock is one of the most popular ones on Reddit, with mentions of the firm resulting in an increase in share price over the past few weeks. The company has a market cap of over $6 billion and posted more than $2.5 billion in revenue last year. The short interest on the stock is close to 8.5%.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm JS Capital is a leading shareholder in ContextLogic Inc. (NASDAQ: WISH) with 8.3 million shares worth more than $131 million.
10. NIO Inc. (NYSE: NIO)
Number of Hedge Fund Holders: 28
NIO Inc. (NYSE: NIO) is ranked tenth on our list of 15 most volatile stocks to buy now. The company is based in China and makes and sells electric vehicles. It has a market cap of over $70 billion and posted more than $2.4 billion in revenue last year. The company will benefit from a proposed European Union plan to ban the internal combustion engine found on traditional cars in the continent by 2035. The company has also recently reported strong vehicle delivery numbers for the month of June.
On July 9, investment advisory HSBC upgraded NIO Inc. (NYSE: NIO) stock to Buy from Neutral and raised the price target to $69 from $54. Yuqian Ding, an analyst at the investment firm, issued the ratings update.
At the end of the first quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in NIO Inc. (NYSE: NIO), down from 34 in the preceding quarter worth $2.6 billion.
In its Q2 2020 investor letter, McLain Capital, an asset management firm, highlighted a few stocks and NIO Inc. (NYSE: NIO) was one of them. Here is what the fund said:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln. In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019. The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
9. Affirm Holdings, Inc. (NASDAQ: AFRM)
Number of Hedge Fund Holders: 32
Affirm Holdings, Inc. (NASDAQ: AFRM) is a California-based firm that owns and runs a mobile-first ecommerce platform. It is placed ninth on our list of 15 most volatile stocks to buy now. The company has a market cap of close to $15 billion. On May 10, the firm posted earnings for the third fiscal quarter, reporting earnings per share of -$1.06, missing market estimates by $0.76. The revenue over the period was $230 million, up 66% year-on-year and beating market estimates by $32 million. The company has more than 6,500 merchants registered on the platform.
On July 14, investment advisory Barclays reiterated an Overweight rating on Affirm Holdings, Inc. (NASDAQ: AFRM) stock with a price target of $85, underlining that the competitive concerns around the firm were overblown.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Thrive Capital is a leading shareholder in Affirm Holdings, Inc. (NASDAQ: AFRM) with 3.9 million shares worth more than $278 million.
8. ON Semiconductor Corporation (NASDAQ: ON)
Number of Hedge Fund Holders: 41
ON Semiconductor Corporation (NASDAQ: ON) is an Arizona-based semiconductor firm. It is ranked eighth on our list of 15 most volatile stocks to buy now. On August 2, the company posted earnings for the second quarter, reporting earnings per share of $0.63, beating estimates by $0.14. The revenue over the period was $1.6 billion, up 38% compared to the revenue over the same period last year and beating estimates by $50 million. The company has a market cap of over $16 billion.
On July 20, investment advisory Piper Sandler kept an Overweight rating on ON Semiconductor Corporation (NASDAQ: ON) stock with a price target of $45, noting that an upcoming analyst day for the firm would be a major growth catalyst for the stock.
At the end of the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in ON Semiconductor Corporation (NASDAQ: ON), down from 45 in the previous quarter worth $1.3 billion.
7. Advanced Micro Devices, Inc. (NASDAQ: AMD)
Number of Hedge Fund Holders: 62
Advanced Micro Devices, Inc. (NASDAQ: AMD) is placed seventh on our list of 15 most volatile stocks to buy now. The firm is in the semiconductor business and is based in California. In earnings results for the second quarter, posted on July 27, the firm reported earnings per share of $0.63, beating estimates by $0.09. The revenue over the period was $3.8 billion, up 99% compared to the revenue over the same period last and beating market expectations by $240 million. The company has a market cap of over $120 billion.
On July 29, investment advisory BMO Capital maintained a Market Perform rating on Advanced Micro Devices, Inc. (NASDAQ: AMD) stock but raised the price target to $140 from $130, appreciating the quarterly earnings beat by the company.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Advanced Micro Devices, Inc. (NASDAQ: AMD) with 25 million shares worth more than $1.9 billion.
6. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 62
Tesla, Inc. (NASDAQ: TSLA) is ranked sixth on our list of 15 most volatile stocks to buy now. The company makes and sells electric vehicles and clean energy equipment. The stock has been soaring over the past few days after a record bull run from late 2020 to April 2021 was interrupted by a temporary pullback in share price amid reports of decreasing demand of EVs in China, one of the largest EV markets for the firm. However, as reports of Chinese EV makers delivering solid delivery numbers roll in, the stock has been rising.
On August 2, investment advisory KGI Securities initiated coverage of Tesla, Inc. (NASDAQ: TSLA) stock with an Outperform rating and a price target of $855. Jennifer Liang, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Tesla, Inc. (NASDAQ: TSLA) with 24.4 million shares worth more than $16 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ: TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
5. Applied Materials, Inc. (NASDAQ: AMAT)
Number of Hedge Fund Holders: 78
Applied Materials, Inc. (NASDAQ: AMAT) is a company that makes and sells semiconductors. It is based in California and is placed fifth on our list of 15 most volatile stocks to buy now. On May 20, the firm posted earnings for the second fiscal quarter, reporting earnings per share of $1.63, beating market estimates by $0.12. The revenue over the period was close to $5.6 billion, up 40% year-on-year and beating estimates by $160 million. On June 10, the firm declared a quarterly dividend of $0.24 per share.
On May 21, investment advisory JPMorgan maintained an Overweight rating on Applied Materials, Inc. (NASDAQ: AMAT) stock and raised the price target to $160 from $146, noting the earnings beat of the firm and strong margins moving forward.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Generation Investment Management is a leading shareholder in the firm with 4.4 million shares worth more than $590 million.
4. NVIDIA Corporation (NASDAQ: NVDA)
Number of Hedge Fund Holders: 80
NVIDIA Corporation (NASDAQ: NVDA) is a visual computing firm based in California. It is ranked fourth on our list of 15 most volatile stocks to buy now. The company has a market cap of over $480 billion and posted more than $16 billion in revenue last year. The stock has benefited from an increase in the prices of semiconductor chips amid increased demand. The products of the firm have also been in hot demand due to the increase in crypto coin mining around the globe.
On July 23, investment advisory Argus kept a Buy rating on NVIDIA Corporation (NASDAQ: NVDA) stock and raised the price target to $230 from $175, highlighting that the demand for the products made by the company still remained high despite the pandemic winding down.
At the end of the first quarter of 2021, 80 hedge funds in the database of Insider Monkey held stakes worth $6.2 billion in NVIDIA Corporation (NASDAQ: NVDA), down from 88 the preceding quarter worth $8.6 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ: NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
3. Square, Inc. (NYSE: SQ)
Number of Hedge Fund Holders: 92
Square, Inc. (NYSE: SQ) is placed third on our list of 15 most volatile stocks to buy now. The company is headquartered in California and markets digital payments solutions. In earnings results for the second quarter, posted on August 1, the firm reported earnings per share of $0.66, beating market estimates by $0.35. The revenue over the period was $4.6 billion, up 143% compared to the revenue over the same period last year but missing market expectations by $370 million.
On August 2, investment advisory Oddo BHF upgraded Square, Inc. (NYSE: SQ) stock to Outperform from Neutral with a price target of $340. Martin Marandon-Carlhian, an analyst at the firm, issued the ratings update.
At the end of the first quarter of 2021, 92 hedge funds in the database of Insider Monkey held stakes worth $9.2 billion in Square, Inc. (NYSE: SQ) , up from 89 the preceding quarter worth $8.8 billion.
2. Micron Technology (NASDAQ: MU)
Number of Hedge Fund Holders: 100
Micron Technology (NASDAQ: MU) is ranked second on our list of 15 most volatile stocks to buy now. The firm makes and sells memory and storage products. It is based in Idaho. In earnings results for the third fiscal quarter, posted on June 30, the firm reported earnings per share of $1.88, beating market estimates by $0.17. The revenue over the period was $7.4 billion, up 36% compared to the revenue over the same period last year and beating market expectations by a handsome $160 million.
On July 19, investment advisory Morgan Stanley maintained an Underweight rating on Micron Technology (NASDAQ: MU) stock but raised the price target to $185 from $176, noting that the advisory expected a strong quarter ahead for the firm.
At the end of the first quarter of 2021, 100 hedge funds in the database of Insider Monkey held stakes worth $7.6 billion in Micron Technology (NASDAQ: MU), the same as in the preceding quarter worth $8.1 billion.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ: MU) was one of them. Here is what the fund said:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
1. Alibaba Group Holding Limited (NYSE: BABA)
Number of Hedge Fund Holders: 135
Alibaba Group Holding Limited (NYSE: BABA) is a Chinese company that operates as a technology firm primarily in the ecommerce business. It is placed first on our list of 15 most volatile stocks to buy now. The company is preparing to release second quarter earnings results amid concerns around regulatory pressures in China and their impact on Chinese firms listed in the United States. The company has a market cap of $530 billion and posted more than $100 billion in revenue last year.
On July 13, investment advisory Deutsche Bank kept a buy rating on Alibaba Group Holding Limited (NYSE: BABA) stock but lowered the price target to $281 from $282, noting that the earrings for the firm could be masked by increased investment spending.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE: BABA) with 13.9 million shares worth more than $3.1 billion.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE: BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
