4 Most Volatile Stocks in 2021 to Buy or Sell
The most volatile stocks this year have given investors a run for their money. The market is choppy, as the pandemic is still sending shockwaves through our economy. With any crisis comes opportunity, though.
On top of that, free trading and stimulus checks have pushed new investors into the stock market. These new investors have helped change the demand side of the equation. Many of them have teamed up online to influence market movements.
As a result, the stocks below have bounced around. Most are hitting new highs, while others are hitting new lows. And each stock has a unique story behind it. So let’s dig into the details to try to determine their volatility going forward.
Finding better ways to predict future price swings is what sets more experienced traders apart from novice invesotrs. Using recent stock volatility as a guide, we can find trading patterns that are likely to continue…
Most Volatile Stocks to Trade in 2021
- GameStop (NYSE: GME)
- Nikola (Nasdaq: NKLA)
- Wayfair (NYSE: W)
- Caesars Entertainment (Nasdaq: CZR)
These stocks have had rapid price changes. It’s easy to see when looking at their year-to-date charts. And when looking at beta values and other historical volatility measures, these are some of the most volatile stocks in 2021.
Due to this recent volatility, investors are expecting more in the future. They’re extrapolating past trends… and as a result, option premiums are high. So if you decide to use options, always consider the risk. You might also want to keep your positions small or use some hedging strategies.
Without further ado, let’s look at where these stock prices have been, and where they might be moving next…
GameStop Stock Hits a High Score
GameStop has been one of the most volatile stocks this year. Robinhood went so far as to block the stock from trading. Back in January, it hit a 52-week high of $483. The following month, it dropped down to $40. And more recently, GameStop’s stock is hovering not far below $200.
It was a popular short squeeze fueled by Reddit traders. Short interest has dropped and big news coverage has slowed down. It’s still at the top of many minds, though. And some online forums continue to hype up GameStop stock.
With a hard-to-justify valuation, its long-term potential doesn’t look great. Many analysts have compared it to Blockbuster. The company is struggling to pivot as the industry moves further into digital games.
With this big headwind and much uncertainty, volatility will likely remain high. I doubt we’ll see GameStop stock climb above its previous high anytime soon, if at all.
Nikola Shares Drive Lower
Nikola hit a 52-week high of $93.99 back in June of last year. And since, Nikola stock has bounced down to $9.37. That’s a huge 90% drop, and things don’t look much better going forward. This steep decline makes Nikola one of the most volatile stocks around.
Fueling this volatility was a report from Hindenburg Research. It was packed with evidence indicating Nikola was a fraud built on dozens of lies. This included recorded phone calls, text messages, private emails and behind-the-scenes photographs.
Traders and investors took notice and have sent Nikola shares on a wild ride. The founder even resigned from his position as chairman. That was after the SEC and Department of Justice started investigating some of the fraud claims.
Nikola has had some positive press since… followed by a few short-lived rebounds. I’m still wary of its long-term potential, though, considering the points Hindenburg Research brought up. Where there’s smoke, there’s usually a fire.
Why Wayfair Is One of the Most Volatile Stocks
Wayfair stock hit a low of less than $30 back in March of 2020. Since, it’s rebounded and hit new highs of up to $369. More recently though, it’s pulled back to less than $300, and these big swings make it easily one of the most volatile stocks.
Overall, investors in this company have been on a bumpy ride. And although Wayfair took an initial hit during the start of the pandemic, it’s well positioned for two big trends…
Wayfair sells furniture and home goods as an e-commerce company. With more people staying home, we’ve seen an uptick in online shopping. On top of that, housing demand and home improvement projects have skyrocketed.
Even with that said, Wayfair’s current valuation seems a bit lofty. It doesn’t have much of a moat. So, long term, it will likely revert back toward the lower mean. And in the short term, the continued volatility should provide some great trading opportunities.
Caesars Entertainment Is a Big Bet
Investors beat down shares of Caesars Entertainment back in March of 2020. The selling pressure pushed shares to less than $10. But since, they have been heading higher, with a lot of volatility along the way. Shares recently hit a 52-week high of $106.20. And there might be more room to run.
Caesars is the largest casino-entertainment company in the U.S. It has many brands including Caesars Palace, Horseshoe, Eldorado and Silver Legacy. With the lockdowns and the decrease in travel, Caesars’ business took a hit.
With the U.S. starting to reopen, though, business is coming back. In addition, Caesars is pushing into sports betting. It closed a $3.7 billion deal to buy bookmaker William Hill. More states are legalizing sports betting, and this is opening up the door for more revenue.
Caesars stock has had a great run-up, largely based on these moves. It has a lot of potential volatility, though. Going forward, Caesars will likely continue to see some big price swings.
More Volatile Investment Opportunities
The stocks above have given investors a wild ride. And it doesn’t appear to be ending anytime soon. As the most volatile stocks continue to bounce up and down, you can trade the short-term swings. If you’re looking for even small volatile stocks, check out these cheap Robinhood penny stocks.
As the market moves, new opportunities are always showing up. It’s challenging to stay on top of all the data and news. That’s why you might want to consider signing up for Liberty Through Wealth. It’s a free e-letter where expert Alexander Green shares some of his best investing insight each and every week.