“The Fed Has Overreacted”: 10 Risky Stocks to Buy Today

Published September 21, 2022 at 9:33 am EDT Updated September 7, 2026 at 2:28 pm EDT

In this article, we will be taking a look at the 10 risky stocks to buy today in line with the expectation of a soft landing.

Marko Kolanovic, a global markets strategist at JPMorgan, thinks that economic data and positioning of investors will aid stocks more as opposed to the hawkish stance adopted by the Federal Reserve. Mr. Kolanovic thinks that the economic data coming out reveals a higher probability of a soft landing as compared to the chances of a global recession, as inflation and wage growth are showing signs of moderation. Furthermore, there is a rebound in growth indicators and consumer confidence. In a note issued to investors on September 13, Mr. Kolanovic stated that the global economy is not likely to go through a recession as an increased fiscal stimulus by China to combat the economic slowdown, along with European support to combat the rising energy prices, will provide tailwinds to risky assets. Furthermore, investor positioning and sentiments also reflect a low likelihood of a recession.

“Inflation Will Resolve on Its Own”

Mr. Kolanovic shared the investment firm’s viewpoint by saying, “we maintain that inflation will resolve on its own as distortions fade and that the Fed has overreacted with 75bps hike.” Any increase or decrease in interest rate takes time to go through the system, and with only one month to go before the mid-term elections in the US, the strategist believes that taking a hawkish stance is an error in judgment by the Federal Reserve that could adversely impact the stability of the markets.

However, the Federal Reserve intends to further raise the benchmark interest rate by 0.75% at least when it convenes for its meeting on September 20 and 21. This expected development will take place after the Consumer Price Index (CPI) report for August 2022 revealed an increase in prices that were higher than the consensus forecast. The CPI increased by 8.3% YoY during August as opposed to the Street’s forecast of 8.1%. However, the CPI was 0.2% lower than July’s reading of 8.5%.

Signs of Resilience

Mr. Kolanovic believes that following the interest rate hike in September, the Federal Reserve will take a more balanced approach regarding interest rate hikes in the future as they could have very serious implications on the global economy. Furthermore, the ease in commodity prices recently points towards signs that inflation could decline in the future. He thinks that stocks offer significant upside as there are signs that global recession will be avoided, and, at present, investor sentiments are hovering at the lowest. According to Mr. Kolanovic, investment in equities remains in the tenth percentile for investment funds, and any change in sentiments would result in significant buying pressure for investment funds that have an underweight weightage on equities. Mr. Kolanovic also added that the latest earnings reported by companies reflected signs of resilience as opposed to the broader economic weakness.

Many analysts expected an earnings dip during Q2 2022, but this was not the case as companies reported higher earnings compared to the same period last year. Furthermore, the analysts are revising earnings estimates for the period ahead, and this reflects a divergence from the Purchasing Managers Index (PMI). The earnings downside is expected to be lower than what is anticipated during a recession. Mr. Kolanovic concluded that as long as the earnings of publicly listed companies remain resilient, the stock market will also perform well. Stocks such as Tesla, Inc. (NASDAQ:TSLA), The Walt Disney Company (NYSE:DIS), and the Alibaba Group Holding Limited (NYSE:BABA) have been attracting investor attention in the current economic circumstances.

Bullish Thesis

Presently, the S&P 500 Index is hovering below the 3,900 points level as the Federal Reserve is lined up to meet on September 20 and 21. Given all these developments, the analyst and his team have a bullish stance on the cyclical, small-cap, emerging market, and Chinese stocks. The analyst has recommended investors go long on the Energy sector following the recent dip. The diversified financial services firm is Overweight on commodities and assets that are sensitive to commodity prices based on its super-cycle thesis. Furthermore, Mr. Kolanovic believes this asset class also provides a hedge against inflation and global economic and geopolitical uncertainty.

Photo by Ruben Sukatendel on Unsplash

Our Methodology

JP Morgan believes we are not headed for a recession. If the firm’s analysis proves to be true, risky growth stocks that have taken a beating in 2022 could begin to rebound in the last quarter of 2022 or the first half of 2023. That means now is the right time to buy such stocks .We have shortlisted 10 risky and cyclical stocks that investors can buy based on the thesis provided by the JPMorgan global markets strategist and his team. We have dived down into the fundamentals of these companies and looked at the growth catalysts offered by these stocks.

“The Fed has Overreacted”: 10 Risky Stocks to Buy Today

10. PagerDuty, Inc. (NYSE:PD)

Number of Hedge Fund Holders: 22

PagerDuty, Inc. (NYSE:PD) is a San Francisco, California-based cloud computing company that specializes in providing software-as-a-service (SaaS) incident response platforms to IT departments.

In a research note issued to investors on September 2, Chad Bennett at Craig-Hallum assigned PagerDuty, Inc. stock a Buy rating with a target price of $34. The target price reflects a potential upside of over 40% from the closing price as of September 20. The analyst gave the target price and rating after the company reported better-than-expected results for Q2 2022 and raised its guidance for the full year 2022. Mr. Bennett also added that the revenue for Q2 2022 was higher than the upper end of the guidance range and consensus forecast as well. Although PagerDuty, Inc. reported a loss per share of $1.38 in the second quarter, analysts expect the company to increase its operational efficiency in the future and achieve profitability in the long run.

Overall, 22 funds held a stake in PagerDuty, Inc. at the end of Q2 2022.

9. DraftKings Inc. (NASDAQ:DKNG)

Number of Hedge Fund Holders: 27

DraftKings Inc. (NASDAQ:DKNG) is a Boston, Massachusetts-based online sports betting platform that will surely benefit in case of a soft landing as the gradual ease in inflation would provide more disposable income for betting activities. The company is at the ninth position on our list of the 10 risky stocks to buy today.

DraftKings Inc. has received favorable commentary from analysts following the start of Thursday Night Football (TNF). In a research note published on September 14, Curry Baker at Guggenheim increased the target price for DraftKings Inc. from $31 to $34 and maintained a Buy rating on the stock. The analyst observed a higher number of downloads and better daily active user (DAU) performance during the first week of TNF. It should also be noted that Amazon.com, Inc. (NASDAQ:AMZN) has selected DraftKings Inc. as the exclusive odds provider for TNF. In Q2 2022, DraftKings Inc. posted an EPS of -$0.49, beating the analysts’ estimates by 19 cents.

8. Exact Sciences Corporation (NASDAQ:EXAS)

Number of Hedge Fund Holders: 28

Exact Sciences Corporation (NASDAQ:EXAS) is a Marlborough, Massachusetts-based molecular diagnostics company that is focused on detecting cancers at an early stage.

Exact Sciences Corporation has lost over 55% of its value YTD as of September 20. On September 6, Cathie Wood’s Ark Investment Management bought nearly 188,000 shares of the company. Following this transaction, the hedge fund focused on disruptive innovation now holds over 15 million shares of Exact Sciences Corporation, which is equivalent to almost 8.5% of the total shares outstanding. Meanwhile, on August 24, Dan Leonard at Credit Suisse initiated coverage on Exact Sciences Corporation stock with an Outperform rating and a target price of $55. The analyst believes that the leadership position held in the non-invasive screening of colorectal cancer through stool samples is durable.

Here’s what RiverPark Funds said about Exact Sciences Corporation in its Q4 2021 investor letter:

“Exact Sciences: EXAS shares declined on a disappointing recovery in Cologuard screening due to COVID. Despite continued revenue growth from Precision Oncology and COVID testing, and Cologuard screening revenue growth of 30%, COVID restrictions limited access to physicians’ offices for the company’s and its Pfizer Joint Venture sales force as well as causing a severe drop off of in-person wellness visits.

In the last year, Exact has also pivoted the company significantly from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) to multi-cancer screening through its Thrive acquisition, and to minimal residual disease and recurrence monitoring through its Ashion and Tardis acquisitions. Through this pivot, Exact has tripled its market opportunity from $20 billion to $60 billion.”

Of the 895 hedge funds in Insider Monkey’s database, Exact Sciences Corporation was held by 28 funds as of Q2 2022.

7. Coinbase Global, Inc. (NASDAQ:COIN)

Number of Hedge Fund Holders: 29

Coinbase Global, Inc. (NASDAQ:COIN) operates a cryptocurrency exchange platform. The cryptocurrency universe will receive a major push in case of a soft landing and gradual ease in inflation.

On September 14, Kenneth Worthington at JPMorgan increased the price target on Coinbase Global, Inc. by over 21% from $64 to $78 and maintained a Neutral rating on the stock. The target price reflects a potential upside of 11% from the closing price as of September 20. The analyst believes that Coinbase Global, Inc. has a significant opportunity to generate healthy revenue as the one-month Treasury yield is expected to creep towards the 3.75% level by the end of this year. Unlike conventional financial institutions, Coinbase Global, Inc. can keep all the interest income without disbursing it to shareholders in the form of dividends. The analyst anticipates the company to earn $1.2 billion in interest income in 2023. The company’s fundamentals merit its inclusion in our list of the 10 risky stocks to buy today.

Coinbase Global, Inc. was discussed in the Q2 2022 investor letter of Miller Value Partners. Here’s what the firm said:

“Coinbase Global Inc. Ordinary Shares fell during the quarter as the crypto markets continued to suffer. While the company reported disappointing results, it committed to capping EBITDA losses at $500M even in the event of “a prolonged market downturn”. COIN’s ample liquidity ($6b in cash on hand) should enable them to survive a prolonged “crypto winter” and invest to strengthen the business in the downturn. While the crypto market is early in its adoption, Coinbase is focused on building the platform for crypto not only supporting trading, and cold storage, but moving into NFTs, staking, and crypto derivatives. We see tremendous upside potential for COIN over the next decade if they are able to successfully execute on their platform strategy.”

6. Teladoc Health, Inc. (NYSE:TDOC)

Number of Hedge Fund Holders: 32

Teladoc Health, Inc. (NYSE:TDOC) is a New York-based telemedicine and virtual healthcare company through its licensable platform services.

Jessica Tassan at Piper Sandler maintained a price target of $40 on Teladoc Health, Inc. with an Overweight rating following a key opinion leader (KOL) call with performance marketing expert Mark Spera on September 2. The analyst has better visibility on the outlook of Betterhelp but is not confident about the company’s ability to achieve 2022 guidance. Tassan believes the company’s 2022 EBITDA guidance depends upon flawless execution of Betterhelp, which is an unprecedented act. However, the analyst is certain about the long-term thesis of Teladoc Health, Inc. stock that could be unlocked if the US economy achieves a soft landing and does not enter into a recession.

RiverPark Funds discussed its outlook on Teladoc Health, Inc. in its Q1 2022 investor letter. Here’s what the firm said:

“Teladoc is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling).

Although the company has been growing steadily for well over a decade, the business has transformed over the past few years as the COVID pandemic caused a significant increase in the demand for virtual healthcare. In addition, the company’s 2020 acquisitions of Livongo, the leader in virtual chronic condition management, and InTouch a competitive telehealth platform, materially broadened the company’s product offerings. At its recent analyst day, management guided to 25-30% top line growth for each of the next three years, exiting 2024 with more than $4 billion in annual revenue. The company also anticipates expanding margins by 100-150 basis points per year in each of the next three years, while still accelerating its investments in marketing and R&D. As with many of our recent purchases, we took advantage of the decline in the company’s shares (down a breathtaking 70% from its 2021 high of almost $300 per share) to establish a small position in Teladoc.”

In addition to Teladoc Health, Inc., analysts have also shared their bullish outlook on stocks such as Tesla, Inc., The Walt Disney Company, and the Alibaba Group Holding Limited in case of a soft landing.

5. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 60

Shopify Inc. (NYSE:SHOP) is an Ottawa, Ontario-based e-commerce company that is known for its namesake proprietary e-commerce platform for online stores and retail point-of-sales platforms. A soft landing would result in the recovery of the e-commerce sector as well.

Shopify Inc. stock has lost over 70% of its value since the start of the year. However, the company is working on executing a growth strategy to achieve profitability in the long run. Shopify Inc. is also undergoing leadership changes as CFO Amy Shapero will be replaced by a seasoned Morgan Stanley banker Jeff Hoffmeister following the company’s Q3 results on October 27. Meanwhile, COO Toby Shannan will hand over his position to Vice President of Product and Merchant Services, Kaz Nejatian. According to observers, the company has made the move to change the CFO to focus more on investor engagement and might also look into providing financial guidance formally. Following all these developments, Ken Wong at Oppenheimer maintained an Outperform rating on Shopify Inc. stock with a target price of $45 on September 8.

Here’s what Rowan Street Capital LLC said about Shopify Inc. in its Q2 2022 investor letter:

“Tobias Lutke, Shopify (NYSE:SHOP) Founder and CEO

When Tobias Lütke opened an online snowboarding store in 2004, he realized how painfully cumbersome e-commerce software was. So he decided to create Shopify – a platform that made it easy for anyone to open up an online store.

Tobi has built Shopify into one of the most popular e-commerce platforms in the world, with $175 billion in GMV (Gross Merchandise Value) and $4.6 billion in revenues in 2021. SHOP went public in 2015, when revenues were just lightly above $200 million, and the stock is up 1,233% since its IPO. Shopify stock peaked in November 2021 (traded at astronomical 47x sales), which coincided with peak enthusiasm for the tech-driven, “stay-home” stocks. Since then, the stock is down almost 80% and is currently trading at just 6x 2023E sales. We believe that Mr. Market is offering us an exceptional value, at current price levels, for an exceptional company led by a very talented, visionary founder/CEO.”

ARK Investment Management held over 1 million shares of Shopify Inc. as of Q2 2022.

4. Twilio Inc. (NYSE:TWLO)

Number of Hedge Fund Holders: 64

Twilio Inc. (NYSE:TWLO) is a San Francisco, California-based provider of programmable tools that can perform various communication functions through its web service APIs.

In Q2 2022, Twilio Inc. posted an EPS of -$0.11, beating the analysts’ estimates by 9 cents. Analysts expect Twilio Inc. to achieve profitability in the coming quarters due to the company’s cost-saving strategy. In a research note issued on September 15, Matt VanVliet at BTIG gave Twilio Inc. stock a target price of $105 and maintained a Buy rating. The analyst believes that the company has been prudent in reframing its cost structure by lowering its headcount by 11%. This action will also result in improving margins in the longer term. Twilio Inc.’s higher emphasis on the go-to-market strategy will continue to provide more upside for the stock. The company plans to increase its focus on the sale of its software solutions portfolio.

Here’s what Carillon Tower Advisers said about Twilio Inc. in its Q1 2022 investor letter:

“Twilio (NYSE:TWLO), the messaging and marketing automation software platform, sold off along with other highly valued software-as-a-service providers. Although the company management team expects continued strong growth, investors have grown concerned that demand could slow following the surge in digital communication during the pandemic.”

3. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 72

Tesla, Inc. is a Texas-based designer, manufacturer, and seller of electric vehicles led by Elon Musk.

Emmanuel Rosner at Deutsche Bank increased the target price for Tesla, Inc. from $375 to $400 and maintained a Buy rating on the stock in an investment note issued on September 16. The analyst anticipates an expansion in the company’s gross profit margin during 2023. This would be driven by significant cost benefits due to the ramp-up in production from the Texas and Berlin gigafactory and the impact of the IRA related to US manufactured battery production credit coming into effect.

Tesla, Inc.’s improvement in the gross profit margin slowed down in 2022 due to cost-push inflation and inefficiencies at the Chinese gigafactory due to the COVID-19-related lockdowns. Rosner now anticipates gross profit margin to expand by three percentage points (ppts) in 2023.

In its Q1 2022 investor letter, Fiduciary Management shared its stance on Tesla, Inc.. Here’s what the firm said:

“Remarkably, the Nasdaq-100 and Russell 2000 indices are up 6.25% and 3.90% through 3/31/22, respectively, since the war started. Tesla, Inc. (NASDAQ:TSLA) went up 57% from its low on February 24 ($700) to the close on March 29th ($1099), which equates to an advance of $413 billion. To put that in perspective, the 24-trading day gain in Tesla was greater than the entire market value of Walmart, Inc.! Tesla trades for 120 times estimated 2022 GAAP² earnings, compared to Walmart’s (NYSE:WMT) 21.8 multiple (1/2023 fiscal year).”

As of Q2 2022, Tesla, Inc. was held by 72 hedge funds.

2. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 106

Alibaba Group Holding Limited is an Hangzhou, China-based diversified technology giant led by Jack Ma. The company excels in artificial intelligence (AI), cloud computing, e-commerce, and many other fields in the technology sector.

Alibaba Group Holding Limited is at a critical junction as auditors from the US are expected to come to Hong Kong to review the audit material of Alibaba this week. The review will include on-site inspection, interviews, and review of documents. If the company passes the audit, it will unlock significant upside potential for the shares as it would reiterate the fact that Alibaba Group Holding Limited is a solid business with stellar margins and strong historical growth. On the other hand, if the audit raises any red flags, it could unlock further downside potential for Alibaba Group Holding Limited’s stock. These factors make Alibaba Group Holding Limited one of the suggested risky stocks to buy today.

Here’s what First Eagle Investments said about Alibaba Group Holding Limited in its Q2 2022 investor letter:

“The shares of Chinese e-commerce giant Alibaba advanced on signs that the Chinese government may be starting to relax its regulatory crackdown on the technology sector. There have been reports that Beijing’s more accommodative stance may re-open the door to the initial public offering of Ant Group, a leading Chinese online payment platform whose planned 2020 IPO was scuttled by regulators. Alibaba owns about one-third of Ant. We continue to like Alibaba’s core assets, including its cloud business, which continues to generate strong cash flows.”

1. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 109

The Walt Disney Company is a California-based diversified media and entertainment conglomerate.

The Walt Disney Company is in the middle of the streaming war against notable players like Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc., and Apple Inc. (NASDAQ:AAPL). Disney Plus has become the biggest streaming service in the world by surpassing Netflix with 152 million paying subscribers as of Q2 2022. The company saw its subscribers increase by 31% YoY.

The Walt Disney Company is also looking into merging Hulu with Disney Plus. Presently, Hulu is a joint venture between Disney, with a majority interest of 67% of the company, and Comcast Corporation (NASDAQ:CMCSA), owning the rest. Disney Plus is also aggressively trying to bring additional users into its platform by launching an advertisement-based streaming service.

Oakmark Funds discussed its outlook on The Walt Disney Company in its Q2 2022 investor letter. Here’s what the firm said:

“Disney (NYSE:DIS) is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”

Overall, 109 funds held a stake in The Walt Disney Company as of Q2 2022.

You can also take a peek at Best Robotics Stocks To Invest In and Best Cheap Dividend Kings To Buy.

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