In this article, we discuss the 10 best stocks for day trading. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Stocks For Day Trading.
The advent of stock trading applications like Robinhood and the onset of the pandemic has propelled a new generation of investors into the stock market over the past year or so, pitting them against professional money managers like hedge funds in a battle for market supremacy that has dominated headlines. A lot of these retail investors are day traders who invest in firms for a short period of time, only seeking to turn a profit and jumping ship at the first sign of trouble. JPMorgan claims these investors will pile $1 trillion into stocks this year.
Investors who have been baffled by the increased market volatility in recent weeks should consider some interesting statistics about day traders before organizing their portfolios around short-term price fluctuations. For example, an academic expert in finance outlined in a publication in 2017 that 80% of all day-traders quit the market altogether in just two years. Terrance Odean, a behavioral finance expert, claims that 40% of all day-traders quit within one month. Over longer periods, such as five years, this percentage falls to around 7%.
The research by both academics underlines how recent claims of retail investors fundamentally altering market dynamics might be devoid of reality. Odean, in a separate study, has also highlighted how following the investing strategy of day traders might also be perilous. In a paper from 2000, the expert has found that day traders underperform the market by almost 6.5% annually. This does not compare favorably to the average investor, who underperforms benchmarks by 1.5% per year, according to Odean.
However, day traders remain an important market force. In the past few months, these day traders have helped push the volumes at the market to record highs. For some, this is good news. For others it is not. Companies like Robinhood have denied claims that most of their users are day traders. In response to a study that has documented the trading patterns of Robinhood users, a spokesperson for the firm told news platform CNBC that it considered most customers as buy and hold.
Investors who are eager to find out more about where the day traders are spending their dollars should check out some popular day trading stocks. Some of the best stocks for day trading presently include ON Semiconductor Corporation (NASDAQ:ON), New Oriental Education & Technology Group Inc. (NYSE:EDU), and FuelCell Energy, Inc. (NASDAQ:FCEL), among others discussed in detail below.
Photo by Adam Nowakowski on Unsplash
Our Methodology
With this context in mind, here is our list of the 10 best stocks for day trading. These were picked keeping in mind the volatility of the share price. The 52-week price range of each stock is mentioned alongside other details for further clarity.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? 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 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 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.
Best Stocks For Day Trading
10. NextPlay Technologies, Inc. (NASDAQ:NXTP)
Number of Hedge Fund Holders: N/A
52-Week Range: $1.26-$4.99
NextPlay Technologies, Inc. (NASDAQ:NXTP) is a Florida-based firm that markets in-game and in-video advertising and monetization services. As mobile gaming and streaming soars to new highs, the stock has plenty of room to climb. NextPlay posted earnings for the second quarter on October 21, reporting a record revenue of $2.6 million. The share price of the firm jumped 20% following the earnings report.
NextPlay Technologies, Inc. (NASDAQ:NXTP) has already started making investments to expand the business. In late August, the firm agreed to purchase Make It Games, a platform owned by AI video game developer Fighter Base Publishing.
On August 20, investment advisory HC Wainwright initiated coverage of NextPlay Technologies, Inc. (NASDAQ:NXTP) stock with a Buy rating and a price target of $3, noting that the firm was building a unique digital ecosystem with cross-selling opportunities.
Just like ON Semiconductor Corporation (NASDAQ:ON), New Oriental Education & Technology Group Inc. (NYSE:EDU), and FuelCell Energy, Inc. (NASDAQ:FCEL), NextPlay Technologies, Inc. (NASDAQ:NXTP) is one of the risky investments that could pay off in the long-term.
9. ABVC BioPharma, Inc. (NASDAQ:ABVC)
Number of Hedge Fund Holders: N/A
52-Week Range: $1.90-$11.60
In the past month, ABVC BioPharma, Inc. (NASDAQ:ABVC) stock has soared in value by more than 173% on the back of disclosures about new patent filings as well as a partnership with a private investment firm based in Tokyo. The partnership with Lucidam seeks to invest in early-stage opportunities in digital health, medical technology, and drug development. The investments made through this partnership will be made on the behalf of BioLite Japan, a subsidiary of ABVC in which Lucidam has a 51% stake.
ABVC BioPharma, Inc. (NASDAQ:ABVC) benefits from this arrangement because BioLite Japan will be bound to transfer rights to promising research to ABVC after licensing products and tools in Japan or anywhere else in the world.
Retail investors have shown interest in ABVC BioPharma, Inc. (NASDAQ:ABVC) because of a promising drug pipeline that includes six therapeutics for the treatment of major disorders as well as a new medical device called ABV-1701/Vitargus.
8. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: N/A
52-Week Range: $9.6-$64.8
Lucid Group, Inc. (NASDAQ:LCID) has been rallying in recent weeks on the back of mentions of the stock on popular retail investor forums like Reddit and Stocktwits. This positive momentum is supported by reports that the company is all set to deliver the Lucid Air Dream Edition vehicles to customers. The cars are priced at $169,000 and offer 520 miles of range. In the last two days of October, the share price of the firm has soared by more than 35%.
In September, Bank of America had initiated coverage of Lucid Group, Inc. (NASDAQ:LCID) stock with a Buy rating and a price target of $30, calling the company “Tesla/Ferrari of new EV automakers” and a “legitimate” startup.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Coatue Management is a leading shareholder in Lucid Group, Inc. (NASDAQ:LCID) with 3.5 million shares worth more than $101 million.
7. Farmmi, Inc. (NASDAQ:FAMI)
Number of Hedge Fund Holders: 2
52-Week Range: $0.20-$2.47
On September 29, Farmmi, Inc. (NASDAQ:FAMI), a firm that makes and sells agricultural products, had announced that it had acquired Jiangxi Xiangbo Agriculture and Forestry Development for RMB70 million. Yefang Zhang, the CEO of the firm, said in a letter to shareholders that the purchase would be an important source of raw materials for the products of the company and allow it to reach goals set for the coming years.
Farmmi, Inc. (NASDAQ:FAMI) has already expanded internationally, having taken on export orders to Israel, the United States, Canada, and even Southwest Asia. As wellness trends grow, there is lots of room for the firm to expand even further.
At the end of the second quarter of 2021, 2 hedge funds in the database of Insider Monkey held stakes worth $888,000 in Farmmi, Inc. (NASDAQ:FAMI), the same as in the previous quarter worth $507,000.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Farmmi, Inc. (NASDAQ:FAMI) with 1.5 million shares worth more than $707,000.
6. Artelo Biosciences, Inc. (NASDAQ:ARTL)
Number of Hedge Fund Holders: 3
52-Week Range: $0.45-$3.67
HC Wainwright analyst Vernon Bernardino recently initiated coverage of Artelo Biosciences, Inc. (NASDAQ:ARTL) stock with a Buy rating and a price target of $4, highlighting that the drug pipeline of the firm showed promise with regards to cancer therapies. In March this year, the company was also accepted into the Alderley Park Oncology Development Program, a government-funded program in the UK for the development of innovative oncology projects.
The inclusion to the program is important because Artelo Biosciences, Inc. (NASDAQ:ARTL) joins a club that includes major pharma companies like AstraZeneca, Johnson & Johnson, and GlaxoSmithKline, among others.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $1 million in Artelo Biosciences, Inc. (NASDAQ:ARTL), up from 1 the preceding quarter worth $295,000.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Artelo Biosciences, Inc. (NASDAQ:ARTL) with 556,738 shares worth more than $863,000.
In addition to ON Semiconductor Corporation (NASDAQ:ON), New Oriental Education & Technology Group Inc. (NYSE:EDU), and FuelCell Energy, Inc. (NASDAQ:FCEL), Artelo Biosciences, Inc. (NASDAQ:ARTL) is one of the stocks attracting the attention of day traders.
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Disclosure. None. 10 Best Stocks For Day Trading is originally published on Insider Monkey.
