“Will the US Fed cut rates?” seems to be the question everyone is asking after the release of the January US jobs report on February 11, which showed a stronger-than-expected labor market. While an improving labor market would normally be a hawkish signal, several economists still believe rate cuts remain in play for the latter half of the year.
One of those economists is Bloomberg Economics’ Anna Wong, who had this to say about the release:
”The January payrolls report lessens the urgency for the Fed to cut rates. But as we expect inflation to ease in coming months – in particular, we expect a more subdued reading on January CPI, due Feb. 13, than the consensus forecast – we think policymakers have room to cut rates to support the labor-market recovery. In all, we expect the Fed to cut rates by 100 basis points this year.”
CIBC Capital Markets had a similar view:
”The signal from this data is clear: this is evidence in favor of the job market stabilizing and supports the Fed’s wait-and-see approach. We’re pushing back the timing of our Fed call, and now expect the first cut in June, but continue to pencil in two cuts for the year.”
Kay Heigh of Goldman Sachs Asset Management echoed this sentiment:
”The labor market is showing some tentative signs of re-tightening, although there remains a way to go. The FOMC’s gaze instead will turn to the inflation picture with the economy continuing to perform above expectations. We still see room for two more cuts this year; however, an upside surprise in the CPI on Friday could tilt the balance of risks in a hawkish direction.”
These rate cuts would be good news for the stock market, as lower rates would lead to higher trading multiples for stocks, according to Dan Niles of Niles Investment Management in an interview with CNBC’s Money Movers on January 31.
A higher stock market valuation would benefit stocks with the highest beta the most. As such, we will now take a look at 13 of the best high-risk (a.k.a. high beta), high-reward stocks to invest in.
Our Methodology
We shortlisted stocks that trade in the US market, with at least $2 billion in market capitalization, at least three analysts covering them, a 5-year beta of at least 1.5x, and at least 25% median projected upside from analysts. We then filtered the list to only contain stocks with at least 15 hedge fund holders, according to Insider Monkey’s proprietary hedge fund database, which tracks 978 hedge funds as of Q3 2025. Finally, we selected the 13 stocks with the highest projected upsides.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: All data presented are as of 12 February 2026.
13. Roblox Corporation (NYSE:RBLX)
Upside: 46.36%
5Y Beta: 1.63x
Number of Hedge Fund Holders: 90
Roblox Corporation (NYSE:RBLX) is one of the 13 High-Risk High-Reward Growth Stocks to Invest In.
On February 9, Roth Capital upgraded its recommendation on Roblox to a Buy (from Neutral) and bumped up its target price on the stock by 7.7% to $84 (from $78). Better-than-expected guidance from management regarding bookings growth for 2026 onwards (above 20% annually over the next several years) was the main catalyst for this rating upgrade. The firm added that RBLX’s improving development tools, which lead to the production of higher-quality games and, in turn, higher revenue (a “strong, sustainable virtuous cycle,” as Roth’s analyst described it), are key to sustaining growth. Roth Capital concluded its research note by reiterating that Roblox is an attractive investment at the current share levels.
Roblox released its Q4-2025 results and 2026 guidance on February 5. According to this release, daily active users (DAU) grew 69% YoY to 144 million, while hours engaged grew even faster, up 88% YoY to 35 billion, suggesting existing users spent more time. The robust growth in operational metrics translated into rapid topline growth, with revenue up 43% YoY to $1.4 billion and bookings up 63% YoY to $2.2 billion.
The company expects the strong Q4 figures to carry over to 2026. Management guidance indicates revenue growth of 32% to 37% in Q1-2026 and 23% to 29% for the full year 2026. Bookings, meanwhile, are projected to grow 40% to 44% in Q1-2026 and 22% to 26% for the full year 2026.
Roblox Corporation (NYSE:RBLX) provides online gaming services through its platforms: Roblox Client, Roblox Studio, and Roblox Cloud. The company is based in San Mateo, California, and was founded in March 2004 by Erik Cassel and David B. Baszucki.
12. Affirm Holdings Inc. (NASDAQ:AFRM)
Upside: 46.68%
5Y Beta: 3.58x
Number of Hedge Fund Holders: 60
Affirm Holdings Inc. (NASDAQ:AFRM) is one of the 13 High-Risk High-Reward Growth Stocks to Invest In.
On February 9, Mizuho reduced its target price on Affirm Holdings by 16.7% to $95 (from $114) while keeping an Outperform call on the stock. Dan Dolev, the analyst from Mizuho, views the recent selloff in AFRM as unjustified. He cited two positive catalysts that the market might be overlooking: AFRM’s recently announced exclusive partnership with Intuit and conservative FY2026 guidance.
For context, on February 2, Intuit and Affirm announced a multi-year deal wherein Affirm would become the exclusive built-in pay-over-time solution in QuickBooks Payments. This deal would give Affirm immediate access to the millions of small and mid-market businesses that use QuickBooks, with more than $2 trillion in invoices per year. Pat Suh, Senior Vice President of Revenue at Affirm, had this to say about the deal:
”Millions of SMBs rely on QuickBooks to simplify operations, keep their cash flow on track, and grow their business. Integrating Affirm directly into QuickBooks Payments will give these businesses another lever for growth — offering customers a transparent, responsible way to pay over time while the business continues to get paid upfront.”
Three days later, on February 5, Affirm released its Q2 FY2026 earnings report, which showed strong growth across the board. Gross merchandise volume grew 36% YoY to $13.8 billion (from $10.1 billion), active consumers grew 23% YoY to 25.8 million (from 21.0 million), while transactions per active customer grew 20% YoY to 6.4x (from 5.3x). Combined, these operational results yielded a 30% YoY growth in revenue, which reached $1.1 billion (from $0.9 billion).
Management also provided its guidance on revenue for the 2nd half of the fiscal year. For Q3-2026, they expect revenue to be between $0.97 billion and $1.00 billion, implying a YoY growth rate of 23.9%-27.7%. For Q4-2026, they expect revenue to be between $1.06 billion and $1.09 billion, implying a YoY growth rate of 21.0%-24.4%.
Affirm Holdings, Inc. (NASDAQ:AFRM) operates a payment network across Canada, the United States, and internationally. The company’s platform includes a consumer-focused app, a point-of-sale payment solution for consumers, and merchant commerce solutions. Affirm Holdings, Inc. was incorporated in 2012 and is based in San Francisco, California.
