In this article, we discuss 11 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
Best High Beta Stocks To Buy Now
11. Plug Power Inc. (NASDAQ:PLUG)
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.
10. Etsy, Inc. (NASDAQ:ETSY)
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.”
9. APA Corporation (NASDAQ:APA)
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.”
8. ON Semiconductor Corporation (NASDAQ:ON)
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.”
7. Marriott International, Inc. (NASDAQ:MAR)
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.”
6. Diamondback Energy, Inc. (NASDAQ:FANG)
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.”
5. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 57
Beta Value: 2.45
Devon Energy Corporation (NYSE:DVN) is an Oklahoma-based independent energy company engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. Devon Energy Corporation (NYSE:DVN) is one of the best high beta stocks to buy now. On October 18, Piper Sandler analyst Mark Lear lifted the price target on Devon Energy Corporation (NYSE:DVN) to $96 from $94 and assigned an Overweight rating to the shares. After a rocky September, exploration and production names are “back on solid footing heading” into the Q3 results given the limited OPEC supply, as per the analyst.
According to Insider Monkey’s data, 57 hedge funds were long Devon Energy Corporation (NYSE:DVN) at the end of June 2022, compared to 66 funds in the last quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with nearly 15 million shares worth $822 million.
GoodHaven Capital Management released its second-quarter 2022 investor letter and mentioned Devon Energy Corporation (NYSE:DVN). Here is what it said:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
4. Apollo Global Management, Inc. (NYSE:APO)
Number of Hedge Fund Holders: 61
Beta Value: 1.66
Apollo Global Management, Inc. (NYSE:APO) is a private equity firm specializing in investments across credit, private equity, and real estate markets. The company is headquartered in New York, with additional offices in North America, Asia, India, and Europe. On October 18, Credit Suisse analyst Bill Katz initiated coverage of Apollo Global Management, Inc. (NYSE:APO) with an Outperform rating and a $59.50 price target. The analyst sees “strong and diversifying” net new asset potential, increasing fee-related earnings margins, upside to consensus estimates, and rising free cash flow deployment for Apollo Global Management, Inc. (NYSE:APO).
According to Insider Monkey’s second quarter database, 61 hedge funds were long Apollo Global Management, Inc. (NYSE:APO), compared to 64 funds in the prior quarter.
Here is what Miller Value Partners Income Strategy has to say about Apollo Global Management, Inc. (NYSE:APO) in its Q4 2021 investor letter:
“Apollo Global Management (APO) rose 18.4% during the quarter. The company reported Q3 distributable earnings (DE) of $1.71, well ahead of consensus of $1.10 and the quarterly dividend of $0.50/share (2.8% annualized yield). Fee-related earnings of $300M beat by 7% while realized net performance fees of $312M topped estimates by 23%. Total assets under management (AUM) of $481.1Bn and fee-earning AUM of $361.3Bn both rose +2% sequentially on the back of robust capital raising with $18.1Bn of inflows over the period. Additionally, Apollo hosted their 2021 Investor Day, outlining long-term financial targets including over $9/share in distributable earnings by 2026 (14% Compound Annual Growth Rate (CAGR) from $5.50 pro-forma 2022E) and fee-related earnings of $4.50-$4.75 (18% CAGR). Management expects to roughly double AUM by 2026 to $1trn from $481Bn currently with a 2.25x increase in fee-related revenues to $4.6Bn.”
3. HCA Healthcare, Inc. (NYSE:HCA)
Number of Hedge Fund Holders: 63
Beta Value: 1.70
HCA Healthcare, Inc. (NYSE:HCA) is one of the best high beta stocks to consider. It is a Tennessee-based health care services company in the United States. HCA Healthcare, Inc. (NYSE:HCA) operates general and acute care hospitals, providing inpatient care, intensive care, cardiac care, emergency services, and outpatient services. On September 16, Raymond James analyst John Ransom raised the price target on HCA Healthcare, Inc. (NYSE:HCA to $250 from $230 and maintained an Outperform rating on the shares. The catalyst for the updated view is a more detailed analysis of labor trends and an analytical framework based on Q2 2022, a decent quarter with only $25 million of additional COVID support payments, which the analyst assumes will stop in 2023.
Among the hedge funds tracked by Insider Monkey, HCA Healthcare, Inc. (NYSE:HCA was part of 64 public stock portfolios at the end of Q2 2022, compared to 62 funds in the prior quarter. Harris Associates is the largest stakeholder of the company, with 7.75 million shares worth $1.30 billion.
Here is what Diamond Hill Capital Management specifically said about HCA Healthcare, Inc. (NYSE:HCA) in its Q2 2022 investor letter:
“HCA Healthcare, Inc. (NYSE:HCA) is a best-in-class operator of acute care hospitals and other health care facilities, including outpatient surgery centers. It has a strong market presence in highly attractive geographies with growing populations and low unemployment, such as Texas and Florida, which leads to a favorable payor mix. We are further attracted to its strong management team that has a stellar track record of deploying capital, and the founding family continues to own almost a quarter of the business. We initiated a position after HCA reported Q1 earnings — it reduced full year guidance due to increased labor costs and lower-than-expected acuity among COVID admissions, dampening near-term investor sentiment.”
2. Antero Resources Corporation (NYSE:AR)
Number of Hedge Fund Holders: 64
Beta Value: 3.62
Antero Resources Corporation (NYSE:AR) is a Colorado-based independent oil and natural gas company that operates in the Appalachian Basin and the Upper Devonian Shale in the United States. On October 17, Antero Resources Corporation (NYSE:AR) stock gained 4.9% on the news that the energy stock is joining the S&P MidCap 400 index. It is one of the best high beta stocks to invest in.
On October 19, Jefferies analyst Lloyd Byrne initiated coverage of Antero Resources Corporation (NYSE:AR) with a Buy rating and a $47 price target. He believes the “Option Value” of energy is up again, supported by a restricted capital cycle. While this is most pronounced in oil & gas, it is also prominent in energy transition names, said the analyst.
According to Insider Monkey’s Q2 data, 64 hedge funds were long Antero Resources Corporation (NYSE:AR), compared to 53 funds in the earlier quarter. Zach Schreiber’s Point State Capital is the biggest stakeholder in the company, with 4.2 million shares worth $130 million.
1. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 82
Beta Value: 1.59
Citigroup Inc. (NYSE:C) is an American diversified financial services holding company, providing various financial products and services to consumers, corporations, governments, and institutions in North America, Latin America, Asia, Europe, the Middle East, and Africa. On October 20, Citigroup Inc. (NYSE:C) declared a quarterly dividend of $0.51 per share, in line with previous. The dividend is payable on November 23, to shareholders of record on November 7. The forward yield was 4.76%. Citigroup Inc. (NYSE:C) is one of the premier high beta stocks to invest in.
On October 17, BMO Capital analyst James Fotheringham maintained an Outperform rating on Citigroup Inc. (NYSE:C) but trimmed the price target on the shares to $71 from $76. The company posted “mixed” Q3 results with strong performance across Services, Branded Cards, and Retail Services segments being offset by softer Investment Banking, Trading, and Global Wealth divisions, the analyst told investors. He acknowledged that the recommencement of share repurchases by the end of Q3 2022 is a potential positive catalyst for Citigroup Inc. (NYSE:C).
According to Insider Monkey’s Q2 data, 82 hedge funds were long Citigroup Inc. (NYSE:C), compared to 88 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading position holder in the company, with over 55 million shares worth $2.5 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Citigroup Inc. (NYSE:C) was one of them. Here is what the fund said:
“Shares of Citigroup Inc. (NYSE:C) declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
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Disclosure: None. 11 Best High Beta Stocks To Buy Now is originally published on Insider Monkey.
