In this article, we discuss the 10 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.
5. Meten Holding Group Ltd. (NASDAQ:METX)
Number of Hedge Fund Holders: 3
52-Week Range: $0.28-$4.27
As education stocks in China deal with a government crackdown, Meten Holding Group Ltd. (NASDAQ:METX), one such firm, has pivoted to the crypto business. In late October, the share price of the firm jumped by more than 13% after it announced that it had signed a deal with AGM, a fintech firm, to speed up the blockchain and crypto mining business of the former. Meten has also ordered some crypto mining machines from AGM as part of the agreement.
In early September, Meten Holding Group Ltd. (NASDAQ:METX) had priced a $60 million stock offering. The firm planned to offer 200 million ordinary shares at $0.30 per share, saying it would use the proceeds for capital expenditure and general corporate purposes.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $1 million in Meten Holding Group Ltd. (NASDAQ:METX), up from 2 in the previous quarter worth $772,000.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Meten Holding Group Ltd. (NASDAQ:METX) with 162,700 shares worth more than $158,000.
4. Zosano Pharma Corporation (NASDAQ:ZSAN)
Number of Hedge Fund Holders: 3
52-Week Range: $0.32-$3.06
Zosano Pharma Corporation (NASDAQ:ZSAN) is a clinical-stage biotech firm with solid fundamentals. In August, the firm beat market expectations on earnings per share and revenue for the second quarter by $0.02 and $0.01 million respectively. In July, it was also granted a patent for the development of a drug related to the treatment of migraines.
Earlier in May, the share price of Zosano Pharma Corporation (NASDAQ:ZSAN) had soared 23% on the back of data published in The Journal of Headache and Pain that revealed that Qtrypta, a drug being developed by the firm, was safe and offered relief for migraines when given over the course of a year.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $1.3 million in Zosano Pharma Corporation (NASDAQ:ZSAN), up from 1 in the preceding quarter worth $199,000.
3. FuelCell Energy, Inc. (NASDAQ:FCEL)
Number of Hedge Fund Holders: 14
52-Week Range: $2.01-$29.44
FuelCell Energy, Inc. (NASDAQ:FCEL) makes and sells fuel cell power solutions. Since the company operates in the clean energy business, the stock has rallied since US lawmakers approved a new $3.5 trillion spending plan of US President Biden that increases tax breaks for clean energy firms and incentivizes adoption of their products. However, the final approval for the plan is facing hurdles in the Senate where there has been increased debate about the incentives being offered to businesses to switch to clean energy.
As a result, clean energy stocks like FuelCell Energy, Inc. (NASDAQ:FCEL) have pulled back in recent weeks. B Riley recently lowered the price target on the stock to $8 from $10 and reiterated a Neutral rating.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in FuelCell Energy, Inc. (NASDAQ:FCEL) with 5.8 million shares worth more than $52 million.
2. New Oriental Education & Technology Group Inc. (NYSE:EDU)
Number of Hedge Fund Holders: 39
52-Week Range: $1.68-$19.97
A Chinese crackdown against dual-listed firms has hurt nearly all Chinese stocks trading in the United States. But New Oriental Education & Technology Group Inc. (NYSE:EDU) has suffered because of new regulation in China that bans for-profit tutoring. As a result, the company has shifted the main business to non-core subjects to circumvent the ban. A housekeeping services firm has also been set up to help with the revenue flow.
However, investment advisory Morgan Stanley recently upgraded New Oriental Education & Technology Group Inc. (NYSE:EDU) stock to Overweight from Equal Weight, noting that the overseas businesses of the firm and expansion into new areas would bear fruit in the long-term.
At the end of the second quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $590 million in New Oriental Education & Technology Group Inc. (NYSE:EDU), down from 45 in the preceding quarter worth $2 billion.
In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and New Oriental Education & Technology Group Inc. (NYSE:EDU) was one of them. Here is what the fund said:
“New Oriental Education shares declined in the quarter, seemingly on account of two notable drivers. First, Chinese online education is currently under a regulatory microscope, although the online tutoring area is not central to New Oriental’s business. We continue to believe that, as a large player in a highly fragmented market, New Oriental is well-positioned to manage regulatory change and offers regulators an easier touchpoint to regulate and monitor than individual mom & pop operators.
As regulatory fears hit the after-school tutoring market, we think New Oriental, a leading player in brick-and-mortar after-school tutoring, could gain strength. We think the long-term backdrop for after-school tutoring remains quite favorable. Significant scale advantages and a highly cash generative model with just approximately 5% market share indicate that New Oriental has potential to grow at a high rate, in our opinion. Further, movements by another investor in New Oriental in late March 2021 prompted indiscriminate selling of shares. Those sales left shares trading at a compelling valuation, in our opinion, so we acted by adding to our position. We think New Oriental remains poised to grow earnings at approximately 25% annual rate in the coming years.”
1. ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Holders: 44
52-Week Range: $23.86-$55.57
Semiconductor stocks have been very volatile lately because of the uncertainty in chip prices. ON Semiconductor Corporation (NASDAQ:ON), a chipmaker based in Arizona, has largely benefited from this, posting market-beating earnings in the third quarter as chip prices touch record highs. On November 1, the company reported earnings per share of $0.87 for the third quarter, beating predictions by $0.13. The revenue over the period was $1.7 billion, beating estimates by $30 million.
Bank of America analyst Vivek Arya has a Buy rating on ON Semiconductor Corporation (NASDAQ:ON) stock with a price target of $60. Arya identifies “newfound pricing power and supply discipline” of chipmakers as the reason behind the positive outlook.
At the end of the second quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $1 billion in ON Semiconductor Corporation (NASDAQ:ON), up from 41 in the previous quarter worth $1.2 billion.
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Disclosure. None. 10 Best Stocks For Day Trading is originally published on Insider Monkey.
