In this article, we discuss 11 best high beta stocks to buy now. If you want to see more stocks in this selection, check out 5 Best High Beta Stocks To Buy Now.
Beta, a statistical measure of a stock’s relative volatility to the broader market index, is often interpreted as a measure of riskiness. A beta of more than 1.0 means that the stock is more volatile than the overall market and a beta less than 1.0 indicates lower volatility than the benchmark index. Thus, stocks with higher betas tend to gain more in bull markets but also plummet harder in bear markets. High beta stocks are positively correlated with returns of the S&P 500, but at an escalated rate.
Famous equity bull Jeremy Siegel, a professor of finance at the University of Pennsylvania, told Bloomberg on October 15 that American stocks are still a “marvelous” bet for investors with a long-term horizon, despite the Federal Reserve’s intense rate policies pushing the S&P 500 into bear territory. He believes that although high interest rates and recession fears are casting a shadow over the stock market currently, it might not be the case for much longer if rates succumb to their long-term trends. That could elevate stocks, in Siegel’s opinion. He explained his stance further:
“I’m staying put, I certainly wouldn’t be surprised if a year, year and half from now we’re 20-30% higher. I think stocks are undervalued greatly in the long-run.”
To prepare for an eventual bull market, it is prudent to invest in high beta stocks which are trading at attractive discounts right now. Some of the best high beta stocks include Citigroup Inc. (NYSE:C), Devon Energy Corporation (NYSE:DVN), and HCA Healthcare, Inc. (NYSE:HCA).
Our Methodology
We have selected the stocks with a beta value of more than 1 as of October 21. We have shortlisted the high beta stocks that offer growth fundamentals, have positive analyst ratings, and display the potential to generate resilient returns in the future. The hedge fund sentiment was assessed from Insider Monkey’s database of elite hedge funds, tracked as of the second quarter of 2022.
Photo by Mirza Babic on Unsplash
Number of Hedge Fund Holders: 26
Beta Value: 1.71
Plug Power Inc. (NASDAQ:PLUG) is a New York-based company that provides end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, and the stationary power markets in North America and internationally. On October 19, Plug Power Inc. (NASDAQ:PLUG) and Olin Corporation (NYSE:OLN) announced that they were launching a joint venture to start construction of a 15 tons per day hydrogen plant in St. Gabriel, Louisiana. Plug Power Inc. (NASDAQ:PLUG) will be the marketer of the JV’s hydrogen and offer logistical support for delivery.
On October 19, Jefferies analyst Sam Burwell initiated coverage of Plug Power Inc. (NASDAQ:PLUG) with a Buy rating and a $28 price target. Plug Power Inc. (NASDAQ:PLUG) manufactures PEM fuel cell systems and seeks to cover the entire hydrogen value chain by marketing electrolyzers and its own green H2 volumes, said the analyst, who believes Plug Power Inc. (NASDAQ:PLUG)’s FY25 sales and gross margin targets “can be achieved,” though execution “will be critical.”
According to Insider Monkey’s second quarter database, 26 hedge funds held stakes in Plug Power Inc. (NASDAQ:PLUG), compared to 33 funds in the earlier quarter. D E Shaw is a significant position holder in the company, with 3.6 million shares worth $60.5 million.
In addition to Citigroup Inc. (NYSE:C), Devon Energy Corporation (NYSE:DVN), and HCA Healthcare, Inc. (NYSE:HCA), Plug Power Inc. (NASDAQ:PLUG) is one of the premier high beta stocks to invest in.
Number of Hedge Fund Holders: 29
Beta Value: 1.79
Etsy, Inc. (NASDAQ:ETSY) is a New York-based company that operates an online marketplace which connects buyers and sellers in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. Etsy, Inc. (NASDAQ:ETSY) is one of the best high beta stocks to invest in.
Goldman Sachs analyst Alexandra Steiger on October 10 initiated coverage of Etsy, Inc. (NASDAQ:ETSY) with a Buy rating and a $130 price target. Through continuous macro headwinds, Etsy, Inc. (NASDAQ:ETSY) has demonstrated a “great level of resiliency” compared to many of its e-commerce peers, the analyst told investors. The analyst said Etsy, Inc. (NASDAQ:ETSY) continues to execute against a “vast and growing” e-commerce opportunity with marketplace differentiation “at scale.”
According to Insider Monkey’s Q2 data, 29 hedge funds were long Etsy, Inc. (NASDAQ:ETSY), compared to 43 funds in the last quarter. John Overdeck and David Siegel’s Two Sigma Advisors is a prominent stakeholder of the company, with 1.5 million shares worth $114 million.
Here is what Artisan Partners specifically said about Etsy, Inc. (NASDAQ:ETSY) in its Q2 2022 investor letter:
“Etsy, Inc. (NASDAQ:ETSY) is the leading e-commerce marketplace for buyers and sellers of unique, hard-to-find products that are “handmade, vintage, or a craft supply.” We believe the company has a long runway for continued top-line growth given its large addressable market and distinct product assortment. In addition, we have been impressed with the operational progress this management team has made since taking the helm in 2017. We acknowledge e-commerce trends have been challenged as consumers shift toward in-person experiences post[1]pandemic, but over time we expect industry growth to return to the long-term trend. Shares have pulled back 75% since topping out in late 2021. Examining this opportunity through a longer-term lens, we initiated a GardenSM position during the quarter at an attractive discount to our PMV estimate.”
Number of Hedge Fund Holders: 36
Beta Value: 3.69
Next on our list of the best high beta stocks is APA Corporation (NASDAQ:APA), a Texas-based company that develops and operates oil and gas properties. The company announced on October 3 that it expects Q3 U.S. production of 212,000 boe/day, topping the high end of previous guidance. On September 14, APA Corporation (NASDAQ:APA) declared a $0.25 per share quarterly dividend, a 100% increase from its prior dividend of $0.13. The dividend is payable on November 24, to shareholders of record on October 21. The board of directors also approved a further 40 million common shares for repurchase.
On October 19, Barclays analyst Jeanine Wai maintained an Overweight rating on APA Corporation (NASDAQ:APA) but trimmed the price target on the shares to $46 from $53 ahead of the Q3 results.
According to Insider Monkey’s data, 36 hedge funds were bullish on APA Corporation (NASDAQ:APA) at the end of the second quarter of 2022, compared to 46 funds in the last quarter. Harris Associates is the largest stakeholder of the company, with 16.7 million shares worth nearly $582 million.
Here is what Oakmark Select Fund has to say about APA Corporation (NASDAQ:APA) in its Q1 2022 investor letter:
“Our oil holding, APA Corporation (NASDAQ:APA) (+54%) was one of our top contributors in the quarter as oil prices rallied due to tight supplies, which were then exacerbated by the Russian invasion of Ukraine. Although their share prices have increased considerably, both companies still look quite undervalued even using longer term oil prices in the $65-70 dollar range. Meanwhile, if times are good over the next couple of years, we expect these companies to return significant percentages of their market caps to shareholders.”
Number of Hedge Fund Holders: 39
Beta Value: 1.73
ON Semiconductor Corporation (NASDAQ:ON) is an Arizona-based company that provides intelligent sensing and power solutions worldwide. According to the company’s Q3 2022 outlook, the revenue will range from $2.07 billion to $2.17 billion, versus a consensus of $2.02 billion. ON Semiconductor Corporation (NASDAQ:ON)’s adjusted EPS is forecasted to be in the range of $1.25 to $1.37, compared to a consensus of $1.22. ON Semiconductor Corporation (NASDAQ:ON) is one of the best high beta stocks to buy now.
On October 18, Deutsche Bank analyst Ross Seymore reiterated a Buy recommendation on ON Semiconductor Corporation (NASDAQ:ON) but trimmed the price target on the stock to $70 from $75. Fears of fundamental deterioration are “leading to very bearish investor positioning” into the Q3 results for semiconductors. However, the analyst is becoming “incrementally more constructive,” noting the drop in the sector compared to the S&P 500 has been priced into the shares in terms of revenue and EPS estimate cuts and the group valuation is 20% under its 5-year average.
According to Insider Monkey’s Q2 data, 39 hedge funds were bullish on ON Semiconductor Corporation (NASDAQ:ON), compared to 48 funds in the last quarter. Jeffrey Smith’s Starboard Value LP is the largest stakeholder of the company, with 5.6 million shares worth $282.6 million.
Here is what Artisan Partners specifically said about ON Semiconductor Corporation (NASDAQ:ON) in its Q2 2022 investor letter:
“ON Semiconductor Corporation (NASDAQ:ON) is a global market leader in power management and image sensors. The company reported 49% gross margins in 1Q22 which met the new management team’s 48%-50% long-term target after revising it higher just one quarter ago. We believe ON has a clear path to >50% gross margins, and its financial results reflect the ongoing structural improvements in both manufacturing and products, cost initiatives, product mix and rising prices. Growing demand for chips in electric vehicles, renewable energy infrastructure, advanced driver assistance (multiple cameras), factory automation and machine vision should drive sustainable high single-digit top-line growth. With shares trading at an attractive discount to our PMV estimate, we continued to move this holding up the Crop of the portfolio.”
Number of Hedge Fund Holders: 46
Beta Value: 1.57
Marriott International, Inc. (NASDAQ:MAR) is an American company that operates, franchises, and licenses hotel, residential, and timeshare properties worldwide. On October 19, Marriott International, Inc. (NASDAQ:MAR) announced its plans to acquire the City Express brand portfolio from Mexico-based Hoteles City Express for $100 million, effectively making Marriott the biggest hotel chain in the Caribbean and Latin America. Marriott International, Inc. (NASDAQ:MAR) is one of the best high beta stocks to purchase.
On September 15, Berenberg analyst Stuart Gordon upgraded Marriott International, Inc. (NASDAQ:MAR) to Buy from Hold with a price target of $185, up from $165. The analyst noted that the swift recovery in lodging has yet to be factored into the shares. “Even allowing for the threat of a recession moving into 2023, the shape of the recovery means that we expect strong RevPAR increases in 2023 across the sector,” the analyst told investors in a research note.
According to Insider Monkey’s Q2 data, 46 hedge funds were bullish on Marriott International, Inc. (NASDAQ:MAR), compared to 52 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is the biggest position holder in the company, with 8.8 million shares worth $1.2 billion.
Here is what Aristotle Capital Management Small Cap Equity has to say about Marriott International Inc. (NYSE:MAR) in its Q1 2022 investor letter:
“Marriott International outperformed in the first quarter following a better-than-expected earnings report for the company’s fourth quarter of 2021. During the pandemic, the company reduced expenses which improved operating leverage as revenue recovers. Expectations for travel in 2022 have improved as COVID cases have declined. The company has a strong pipeline of new hotels coming into the Marriott system. There are some indications that business-related travel is starting to recover.”
Number of Hedge Fund Holders: 54
Beta Value: 2.01
Another important high beta stock to monitor is Diamondback Energy, Inc. (NASDAQ:FANG), a Texas-based independent oil and natural gas company that operates in the Permian Basin in West Texas and New Mexico. On October 17, the company priced an offering of $1.1 billion in aggregate principal amount of 6.250% senior notes that will mature on March 15, 2033. The proceeds will be used for corporate expenses.
On October 18, Piper Sandler analyst Mark Lear raised the price target on Diamondback Energy, Inc. (NASDAQ:FANG) to $209 from $195 and maintained an Overweight rating on the shares. After a volatile September, exploration and production firms are “back on solid footing heading” heading into the Q3 results with the “OPEC+ supply cuts mostly to thank,” the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey, 54 funds reported owning stakes worth $811.3 million in Diamondback Energy, Inc. (NASDAQ:FANG) at the end of June 2022, compared to 47 funds in the prior quarter worth $887 million. Harris Associates held the leading stake in the company, comprising 1.5 million shares valued at $181.2 million.
Like Citigroup Inc. (NYSE:C), Devon Energy Corporation (NYSE:DVN), and HCA Healthcare, Inc. (NYSE:HCA), Diamondback Energy, Inc. (NASDAQ:FANG) is one of the best high beta stocks to buy according to elite hedge funds.
Here is what Miller Opportunity Equity has to say about Diamondback Energy, Inc. (NASDAQ:FANG) in its Q4 2021 investor letter:
“Diamondback Energy (FANG) returned 14.4% in the quarter as oil price rose and fell during the quarter ending the period largely in the same place that it started. The company reported strong 3Q results beating on the top and bottom line. The company reported revenue of $1.9B beating consensus of $1.5B with EPS of $2.94 beating expectations for $2.79. The beat was driven by a combination of higher volumes, higher realizations, and efficiency gains. The company increased its total production guidance for the year to 370-372mboe/d1 (up from 363-370mboe/d) while lowering Capital Expenditure (CAPEX) guidance for the second time this year to $1.49-1.53B. The company raised the dividend for the third time this year to $2/share annually while authorizing a new $2B share repurchase program. Starting in 4Q21, the company plans to return 50% of Free Cash Flow to shareholders through the base dividend and a combination of buybacks and special dividends. Finally, the CEO Travis Stice announced plans to reduce methane emissions by 70% as part of the firm’s ESG initiative.”
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Disclosure: None. 11 Best High Beta Stocks To Buy Now is originally published on Insider Monkey.
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