There’s nothing wrong with having risky stocks. The mistake that investors make is by not understanding the risk and then getting into trouble when there’s a sudden downturn in the market.
Do your homework and learn about the names in question. You accept that there could be as many rough patches as there are bull runs.
Owning risky stocks makes it even more important for an investor to understand their risk tolerance and be ready to accept whatever losses you may incur on your long, winding path to riches.
If you’re going to invest in risky stocks, then one idea is to devote only a small percentage of your portfolio. Some investors put way too much of their portfolio into risky stocks, hoping for a quick return.
Sure, quick returns are great, but if the market turns against you, you lose too much of your nest egg to recover.
I used the Portfolio Grader to identify seven risky stocks that are highly rated based on quantitative measures, recent performance and momentum. If you are determined to jump into the deep end, these stocks are a good place to start.
| BBAI | BigBear.ai | $1.96 |
| AEHR | Aehr Test Systems | $37.95 |
| ATLX | Atlas Lithium | $17.83 |
| CDIO | Cardio Diagnostics | $3.83 |
| MSTR | MicroStrategy | $280.35 |
| VEON | Veon | $17.70 |
| AMAM | Ambrx Biopharma | $9.59 |
BigBear.ai (BBAI)
BigBear.ai (NYSE:BBAI) is working with the Air Force as a prime contractor under a $900 million contract.
BigBear.ai uses an end-to-end data analytics platform to harness artificial intelligence and machine learning to provide insights for clients.
It says the company’s “predictive analytics technology mines data with depth and agility that far surpasses traditional intelligence tools.
BBAI stock is not for the feint of heart. While it trades at about $2 per share, BigBear.ai is up 200% so far this year. And that’s even after a sudden 36% fall in just the last month.
There are plenty of defense contractors to choose from – and many of them are bigger and more established than BigBear.
If you wanted to bet on an up-and-comer that uses cutting-edge technology and already has a contract with the government, BBAI is an interesting choice.
BBAI stock has a “B” rating in the Portfolio Grader.
Aehr Test Systems (AEHR)
A few weeks ago, you may have called Aehr Test Systems (NASDAQ:AEHR) a no-brainer of a stock, and not a risky pick. But things change fast.
Aehr is known for making the burn-in equipment that’s used in silicon carbine chips that are used commonly in electric vehicles. EVs are all the rage these days and each one takes thousands of semiconductors, which is why people were so bullish on AEHR stock.
But then Tesla (NASDAQ:TSLA) announced it came up with a new power inverter that cuts its reliance on silicon carbide. That announcement sent AEHR stock down more than 8% in a single day.
But now the market’s reconsidering. Aehr recovered those losses and more, and the stock is up 88% so far in 2023.
The Tesla situation is worth watching. But for now, AEHR has an “A” rating in the Portfolio Grader.
Atlas Lithium (ATLX)
Let’s keep with the EV theme for a bit longer. Atlas Lithium (NASDAQ:ATLX) is a mineral exploration company that’s focused on, as the name suggests, the mining and lithium and other metals used in batteries.
The company, with a market capitalization of $100 million, boasts no debt and a series of mining projects in Brazil.
The stock is up nearly 150% on the year on speculation that it could be ripe for an acquisition by Tesla and its voracious appetite for lithium.
While lithium mining has huge profit potential, Atlas certainly meets the criteria of a risky stock. It needs deep pockets as an exploration stage company and there’s never a guarantee the mines will produce lithium.
ATLX stock has a “B” rating in the Portfolio Grader.
Cardio Diagnostics (CDIO)
Cardio Diagnostics (NASDAQ:CDIO) is one of the newer companies for investors to consider, coming off a special purpose acquisition company merger in October with Mana Capital.
The company works to detect and prevent cardiovascular disease in patients through its Integrated Genetic-Epigenetic Engine, which creates personalized treatment options for subjects.
SPAC deals are risky in general because investors have less opportunity to learn about the details of a company and how its funded than if it were going the traditional route of going public. CDIO stock launched at $11.50, but now trades around $4.
But there may be better days ahead. In March, China recognized announced that it was recognizing one of Cadio Diagnostic’s intellectual properties, which allows it to expand patent protection in that country, adding to the protections it has in the U.S. and Europe.
Cardio Diagnostics isn’t out of the woods yet but it’s an interesting pick and one of our risky stocks. CDIO has a “B” rating in the Portfolio Grader.
MicroStrategy (MSTR)
If you’re still dreaming about massive profits with cryptocurrencies even after last year’s downturn, then MicroStrategy (NASDAQ:MSTR) may be the perfect risky stock for you.
At the end of 2022, MicroStrategy owned 132,500 Bitcoin (BTC-USD). And it’s not stopped there. The company bought another 6,455 bitcoins in the last several weeks, it said, bringing its current holdings to 138,955, valued at about $3.9 billion.
Obviously, MicroStrategy will rise and fall on the strength of Bitcoin prices. It considers Bitcoin a strategic investment asset – and if the cryptocurrency would ever fail, then MSTR investors would draw the short end of the straw.
MicroStrategy does business with banks that deal in cryptos, and sometimes that doesn’t work out so well. The company had a loan with Silvergate Capital (NYSE:SI), which is now in the process of liquidation.
While MicroStrategy’s loan wasn’t due until 2025 and it prepared the remaining $205 million on its loan this month, MSTR stock dropped more than 17% when Silvergate announced it was closing.
MSTR stock has a “B” rating in the Portfolio Grader.
Veon (VEON)
Telecommunications stocks are always a popular choice. But if you want a risky telecom stock, then Veon (NASDAQ:VEON) might be your cup of tea.
Veon provides national and international roaming services for mobile devices, wireless internet and fixed-line service. While it’s headquartered in Amsterdam, the company provides services in Europe, Asia and Africa, with a large footprint in Russia and central Asia.
Investing in an international telecom stock has some built-in risks. The war in Ukraine is always at risk of spreading, and the economic effects are being felt throughout Europe. Russia is under heavy economic pressure because of sanctions imposed by the West in retaliation for its war against Ukraine, so that makes any investment risky.
Veon announced last year that it would exit the Russian market. In February, Russian regulators gave approval for Veon to sell that part of the business to PJSC VimpelCom, which is operated by senior members of Veon’s management for $2.1 billion. The transaction is expected to close in June.
Veon also saw wild stock price swings this spring as the company underwent an ADR ratio change that was the equivalent of a 1-for-25 reverse stock split.
There’s a lot to unpack here, to be sure. But exiting the Russian market and getting some stability will be good for shareholders. VEON stock has a “B” rating in the Portfolio Grader.
Ambrx Biopharma (AMAM)
Ambrx Biopharma (NASDAQ:AMAM) works to use engineered precision biologics to treat cancer. The company uses precision engineering and a powerful genetic code platform to create specialized treatments.
Candidates in its pipeline would treat prostate, lung and ovarian cancer, as well as multiple myeloma, non-Hodgkin’s lymphoma and leukemia.
Ambrx is new to the Nasdaq composite, as it traded on the New York Stock Exchange until mid-March. The move to the Nasdaq and investor enthusiasm helped Ambrx stock jump more than 340% so far this year.
But it’s an expensive business, and the profits really don’t start rolling in until the drugs pass clinical trials, get regulatory approval and hit the market. Ambrx raised $78 million by selling 16.5 million shares, which it says will provide capital it needs through 2025.
AMAM stock has a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article had long positions in TSLA and BTC. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.