We recently compiled a list of the 10 Most Volatile Stocks Under $3 For Day Trading. In this article, we are going to take a look at where EVgo, Inc. (NASDAQ:EVGO) stands against the pump and dump stocks.
Day trading involves buying and selling stocks within a single trading day to capitalize on short-term price movements. Volatile stocks are often preferred for their frequent price swings, creating opportunities for quick profits. Equity beta, which measures the sensitivity of a stock’s return to market changes, is a key metric often used by investors for gauging volatility. Day traders close their positions by the end of the trading day to avoid the risks associated with holding overnight, such as unexpected market events, earnings announcements, or global developments that can drastically impact stock prices before the next trading session begins. While penny stocks, particularly those priced under $3.00 per share, are appealing due to their low entry cost and potential for rapid gains, they also carry heightened risks like low liquidity and susceptibility to manipulation. The key takeaway for readers is that these trades shall be approached with cautiousness and a clear strategy with risk management in place.
READ ALSO: 10 Best Stocks For Day Trading
Stocks under $3.00 offer a distinct advantage in that they typically operate below the radar of hedge funds, which prioritize larger, more liquid investments to accommodate their substantial capital and complex strategies. Hedge funds, the most informed and skilled investors, leverage extensive resources, market expertise, and advanced analytics to gain a competitive edge. Their absence in the penny stock space leaves more room for retail investors to seize opportunities without competing against institutional investors’ sophisticated tactics. This lack of institutional interest can create less efficient pricing, offering well-researched retail traders the potential to identify undervalued stocks and profit from short-term volatility via day trading.
Short-term trading strategies become more attractive during times of macroeconomic uncertainty, which can further fuel volatility and create opportunities for swing trading. The main volatility index in the US market still remains elevated vs. its moving average as investors have a hard time digesting the tariffs situation and the abrupt cuts in federal workforce and spending. Bond yields are reluctant to price in lower rates in the future – despite odds of an economic recession rising substantially if compared to the beginning of the year, the potentially accelerating inflation, as fueled by tariffs, will likely keep rates high. Regardless of what happens, it is clear that Trump 2.0 gives investors plenty of anxiety – many have been actively seeking cheaper investments abroad, particularly in Europe, which has caused the US stock market to relatively underperform the rest of the world.
Small-cap stocks are usually the most affected during periods of heightened volatility. The good news is that the Bull-Bear Ratio compiled by Investors Intelligence fell to 1.3 during the past week, which, from a contrarian perspective, is a bullish signal. This means that pockets of opportunity might soon return to the penny stocks category, both for long-term investors and day traders. Despite short-term fears and uncertainty, the fundamentals of the US stock market remain solid, with future earnings estimates staying strong and potentially seeing an uplift from tax cuts later this year or next. We suggest considering stocks with a high equity beta, above 2.0, as this category will likely outperform in a rising market.
A businessman plugging in to a public charging station, symbolizing the services provided by the company.
Our Methodology
We used Finviz to filter companies with a share price under $3.00 and that have an equity beta above 2.0. Then we compared the list with Insider Monkey’s proprietary database of hedge funds’ holdings as of Q4 2024 and included in the article the top 10 stocks with the highest hedge fund ownership.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
EVgo, Inc. (NASDAQ:EVGO)
Number of Hedge Fund Holders: 37
EVgo, Inc. (NASDAQ:EVGO) is a leading electric vehicle (EV) charging infrastructure company in the United States. It operates a network of fast-charging stations for electric vehicles, providing both public and fleet charging solutions. EVGO’s network supports various EV models and aims to accelerate the adoption of electric vehicles by providing convenient, accessible, and reliable charging options. The company generates revenue through charging fees, network access subscriptions, and partnerships with automakers and businesses. It is focused on expanding its charging infrastructure to support the growing demand for EVs as part of the transition to cleaner transportation.
EVgo, Inc. (NASDAQ:EVGO) delivered strong financial results in Q4 and the full year 2024, with total revenue growing 60% YoY to $257 million. The company’s core charging network revenues more than doubled, increasing 110% to $155.7 million. EVGO achieved record operational stall additions, ending 2024 with 4,080 stalls, a 37% increase over 2023. Network utilization improved significantly, reaching 24% in Q4 2024, up from 19% a year ago. The company made substantial progress on profitability, with the charging network gross margin expanding to 37.6% in 2024, up from 26% in 2023.
EVgo, Inc. (NASDAQ:EVGO) secured a $1.25 billion loan guarantee from the Department of Energy, ensuring funding to more than triple its installed base over the next 5 years. The company is making strides in improving customer experience, with 50% of EVGO stalls now served by higher power 350-kilowatt chargers. The company is also focusing on operating efficiencies, achieving a 9% reduction in gross CapEx per stall for current-generation chargers in 2024. Looking ahead, management expects 2025 revenues in the range of $340 million to $380 million and anticipates reaching adjusted EBITDA breakeven. The company is well-positioned to benefit from the growing electric vehicle market, with a resilient business model that can adapt to various market scenarios.
Overall EVGO ranks 1st on our list of the most volatile stocks under $3 for day trading. While we acknowledge the potential of EVGO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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