Volatile stocks can become your worst nightmare in these challenging times. The year 2021 is not the right time to take risks and invest in volatile stocks that can bring quick profits to lose all your assets in no time.
The economic ups and downs market is witnessing these days is only affordable for tycoons who have no issue losing heaps. But if you are a wage earner or don’t have much investment, don’t step in the storm, it will take you to a tunnel where there is no light at the end, and all you’ll see is darkness and dimness with no way out.
What Are Volatile Stocks?
Before proceeding, if you are unaware, let me make it straightforward for you that volatile stocks are shares whose price changes by a large percentage each day. One day you might be ready to buy a jet, but other days you may even not afford the fuel for your car.
If we talk about technical terms, you can understand volatile stocks as shares whose stability refers to fluctuations in a security’s or financial market’s price, exclusively equated with a benchmark or typical performance; one change and there’s a massive jolt to the stock market. Therefore, these stocks oscillate more in price than any other stocks and are highly risky to invest in, especially in twenty-twenty-one.
Due to their unpredictable nature, these stocks are reported as a percentage. For instance, a stock is ranked 40%; this means it is likely to either gain or lose 40% of its total value. The higher the percentage will be, the more volatile will be the stock.
However, you can also measure them by looking at stocks beta. Beta measures the stock’s volatility by comparing it to the overall stock market.
For example, a share with a beta of 1 denotes the share is trading with the stock market, while a beta over 1 signal that the stock is more volatile than the entire market; if the market sells off, you can anticipate that stock to trade-off even more.
A beta under one signifies the stock that isn’t very volatile. It usually consists of utility and defensive stocks.
Risk Of Holding Volatile Stocks
If you are a newbie to the stock market and don’t know which stocks are worth buying, you are at greater risk because while trading volatile stocks, many day traders make the blunder of holding on to these stocks overnight. This can be intentional or unplanned or also not well pondered out.
The more you are holding onto these unstable and unpredictable stocks, the greater you are at risk. This is the reason experts recommend avoiding volatile stock in 2021; they believe in these challenging times, the situation can get a lot tough for you if the stock gaps against you resulting in massive loss.
These unforeseen moves are mostly the consequences of disappointing ROIs, CEO stepping down, bad fiscal announces, etc.
For now, many can’t afford this unnecessary risk, especially the new gamers with limited investments.
Investing In 2021; Seven Stocks To Avoid
Here is the list of the seven most volatile stocks that you need to stay away from.
1. Prospect Capital (PESC)
Prospect Capital Corporation is the oldest and largest business development company that provides steady and attractive returns to its shareholders.
The objective of prospect Capital Corporation is to produce current income and long-term capital escalation through debt and parity investments.
Throughout the seventeen plus years of services, PESC has been offering consistent yields to its investors.
Besides this, prospect Capital Corporation today has a middle-market capitalization of almost $3 billion. The typical traded performance of PESC is 2.15 million shares for the last few days. However, the 5Y monthly beta is 0.93, which has made PESC a volatile stock to invest in in 2021.
2. STAG Industrial (STAG)
STAG Industrial Inc. is a real asset investment organization that functions by attaining single-tenant industrial possessions in the United States.
With this approach towards business, STAG industrial tend to sustain company growth and offers its shareholders a balanced return on their investments.
In addition, STAG possesses a market capitalization of approx. $5.4 billion. The average traded volume of STAG shares is 1.21 million for the last few days, while the
5Y monthly beta is 0.92 affecting it as a relatively high volatile stock.
3. Gladstone Investment Corporation (GLAD)
GLAD is again a real estate trust that aims to gain, preserve and operate net hired industrial and office assets within the United States.
Their market capitalization is $327 Million in approx. Over the few days, Gladstone Investment Corporation has had an average traded volume of 228,666 shares. Its 5Y monthly beta is 1.45, making GLAD an extremely outstanding volatile stock to invest in in 2021.
Since Gladstone is a highly volatile stock, there is a sharp drop and increases in its price over the last thirty days. However, the stock jumped down to $9.66 on February, 25th 2021 and climbed to $10.35 on March, 15th 2021.
Suggested Read: How do we determine whether a stock is worth buying or not?
4. Alterity Therapeutics (ATHE)
Alterity Therapeutics is an Australian biotech company that develops therapeutic drugs for the treatment of neurodegenerative and Parkinsonian diseases in Australia.
The company’s leading drug is ATH434 which is used to treat Parkinson’s disease and is in the progression of creating PBT2, which will be beneficial as an antimicrobial agent.
ATHE’s market capitalization is $57 million, and the average trading volume for the past few days is 550,000 shares. The 5Y monthly beta is 0.89, which makes Alterity Therapeutics a relatively high volatile stock.
The stock on March, 17th 2021, closed at $1.63.
5. Urban One (UONE)
Urban One, with its divisions, works as an urban-oriented multimedia firm in the US. The company functions through four fragments, i.e., Radio Broadcasting, Reach Media, Cable TV and Digital. The primary targets of UONE are African-American and Urban communities that they target through their media channels.
The market capitalization of UONE is approximately $127 million, with an average trading volume of 451.580 shares for the last few days.
The monthly beta of Urban One is 1.02. Over the last month, there were multiple ups and downs with no consistent price trends. However, the trade level increased to 3.13 million on February 22 2021, a record 900% trading frequency mount from the preceding day.
6. Carver Bancorp Inc. (CARV)
Carver Bancorp Inc. is the holder of the Carver Federal Savings Bank, a federally chartered savings bank that offers business and customer baking products and services. CARV offers secured bank loans to families seeking to buy any assets.
According to the paper written by a coursework writing service, “The mortgage at Carver is also provided to those looking forward to constructing and renovating commercial properties and residential housings. These loans, however, can also be acquired for corporate purposes and non-governmental organizations.”
The market capitalization of CARV is $37 million approx. with an average traded volume of 412,660 shares for the last few days.
The monthly beta of Carver Bancorp Inc. is 1.41, which makes it a highly volatile stock to invest in in 2021.
The stock on March 17, 2021, closed on $11.19
7. Simon Property Group (SPG)
The last but not least volatile stock for this article is Simon Property group. SPG is one of the largest real estate investment trusts and a global guru in the proprietorship of leading entertainment, dining and shopping destinations.
The market capitalization of SPG is $39 Billion approx. with an average trading volume of 3.49 million shares over the past few days. The 5Y monthly beta of Simon Property Group is 1.56 making it a moderately high volatile stock to invest in in 2021.
Author Bio: Claudia Jeffrey is currently working as an external QA Editorial at Crowd Writer, which is one of the most reliable places to acquire your HND assignment help at reasonable rates. Claudia is also a stock market expert and loves giving her audience the word of advice to keep them away from the pitfalls of this unpredictable market.