Traders’ attention was turning away from growth stocks and is now trickling to these risky stocks.
This is a scenario that investors have seen before, most recently in 2022. And they’re not coming back to get burned again.
In its place, there has been a massive rise of interest in… well… everything else.
There has also been a surge in interest in Tesla (NASDAQ:TSLA) alternatives. These speculative businesses appear to be “hypergrowth” investments rather than standard “growth” equities.
As the Federal Reserve of the United States continues to signal additional rate hikes, here are the five stocks that InvestorPlace.com readers are keeping an eye on.
AMC
AMC Entertainment (NYSE:AMC) became an extreme instance of “buy the rumor, sell the news” this week after reporting fourth-quarter profits. Stock rose nearly 25% before earnings, then fell back once the results were released.
The remarkable round-trip was most likely triggered by excessive trading in near-dated options. It’s a strong tool to make speculative, leveraged bets, but it also produces high volatility in the underlying stock as market participants rebalance their hedges.
This could also be the explanation for heightened investor interest in AMC’s APE preferred shares. It’s a share class with more risk, but also the potential for 150% gains. My quantitative Profit and Protection stock-picking algorithm gives the corporation an A-.
Rivian
Rivian (NASDAQ:RIVN) shares fell 18% this week after the company issued lower-than-expected expectations. The electric vehicle manufacturer now aims to deliver only 50,000 units, falling 17% short of Wall Street’s expectations. The corporation also announced that its financial position fell by $2 billion in the quarter, prompting internet commentators to make sarcastic analogies to ride-hailing companies.
According to our site’s analytics, investors are still active and interested. Samuel O’Brient’s Q4 earnings preview was one of our most-read items heading into the week, and Rivian shares have been remarkably robust despite the company’s bleak guidance.
In addition, the company receives an A on my quantitative methodology for its tremendous revenue growth rate and negative stock momentum. As a reminder, hypergrowth enterprises that have lost share price tend to outperform the market over the next 12 months.
Mullen Automotive
Mullen Automotive (NASDAQ:MULN) fans continue to visit our website to learn about forthcoming events. Eddie Pan’s Mark Your Calendars for March 7 talks extensively about Bollinger’s Work Truck Week, where the company intends to demonstrate its new B4 Chassis Cab. And every price increase seems to pique people’s interest in whether or not a short squeeze is taking place.
Mullen fans, after all, are a devoted bunch.
Of course, the stock only gets a C- on my system. The EV startup’s slow growth and low fundamental quality indicate that shares will fall during the next year. Only its rock-bottom share price keeps the company from receiving a D or F.
Troika Media Group
One of these risky stocks, Troika Media Group (NASDAQ:TRKA) is still on the rise, having gained 35% in the previous week. From the beginning of the year, the stock has increased by approximately 110%.
The NYC-based shell business combined with Converge Direct, a customer acquisition firm estimated to produce more than $27 million in adjusted EBITDA in 2022, in March 2022. Even with mediocre valuations, TRKA shares are priced at roughly $4.70.
Yet, markets are pricing TRKA based on the financials of its predecessor – a sham firm with no earnings. And if ordinary investors get their way, they may find themselves sitting on the next 1,000% stock.
Rocket Companies
Optimism remains stronger than it was in January. Rocket Companies (NYSE:RKT), a mortgage lender, has seen its stock rise 20% since the beginning of the year. Mortgage rate stability and attractive mortgage incentives have enticed some purchasers to return to the market.
Yet, if our readers’ choices are any indicator, the United States may still be in for a recession this year.
Finally, investors are looking for a return.
Long after the market had peaked, we noticed continuing interest in Tesla and other Cathie Wood-backed growth equities in 2022, and few more risky stocks. Investors were sitting on significant cash gains as a result of the massive 2020-2021 bull market. As a result, people appeared to be somewhat nonchalant about losses.
In 2023, the situation is radically different. This time, investors are exiting just as swiftly as they entered. The AI bonanza of January is being replaced by an even greater one in meme stocks and turnarounds.
That is not a simple technique to make money. If you bought at the top of the market, an investment in AMC may have lost you 20% this week.
Yet, investors continue to take risks. If firms like Tesla are shifting their focus to riskier endeavors, why shouldn’t former TSLA investors do the same?
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