You likely already know that risk is an important consideration when making any investment. While it can be difficult to measure or quantify the risk a stock possesses, beta is one mechanism. Beta is the measure of a stock’s volatility, relative to the movement of the rest of the stock market. The S&P 500 is typically used as the benchmark by which any stock’s beta is calculated.
The S&P 500 is a market-capitalization-weighted index of the 500 largest US publically traded companies. Since the companies are so large, they’re normally considered to be very low risk. The S&P 500 index is given a beta of 1.0. Individual stocks have a beta score ranking in relation to how much they deviate from the general movement of the market.
Any stock that swings more than the market (indicating it’s more volatile) will have a score above 1.0. Further, any stock that moves less than the overall market (indicating it’s less volatile) will have a beta score below 1.0.
Since volatility essentially translates to higher risk, this means there is a higher chance of making losses on your investment. However, as you probably well know, higher risk also means the potential for higher reward. We’ve put together a list of some of the best beta stocks on the market for investors looking for hefty returns.
Interested in investing in high beta stocks? Check out Trade Ideas. Trade Ideas uses AI-based software to help you find amazing new investment opportunities without the hassle.
Best High Beta Stocks
United Rentals, Inc. (NYSE:URI)
As the world’s largest equipment rental company, United Rentals had 13% of the North American market share in 2019. Their primary equipment focus is construction and industrial equipment such as trucks, forklifts, compressors, and more. In total, United’s fleet consists of more than 660,000 rental units.
The company operates across 49 US states, 10 Canadian provinces, 4 European countries, and Puerto Rico. United Rentals primarily focuses on general and aerial rentals. However, they also offer power & HVAC units, tool solutions, fluid solutions, and more. The company has a market capitalization of $18.76 billion.
Coming in with a beta value of 2.11 means that United Rentals is more than twice as volatile as the general market. Despite its volatile nature, the company has fared well in 2020 and beyond. United Rentals now has a share price of nearly $260. The future looks solid for investors with holdings in United Rentals considering there’s no disruptive tech or competitor in this space.
SVB Financial Group (NASDAQ:SIVB)
Headquartered in California, SVB Financial Group has a number of well-known subsidiaries, including Silicon Valley Bank. This bank has helped to fund over 30,000 startups and is one of the largest banks in the US. Interestingly enough, the bank is also one of the largest financial service providers to Napa Valley wine producers.
Between their many subsidiaries, SVB Financial offers asset management, brokerage and investment services, fund management services, and more. With a market cap of $25.4 billion and a beta value of 2.15, SVB is slightly more volatile than United Rentals.
Since April of 2020, SVB’s share price has grown more than 251.3% to its highest price in history. Investors may want to watch and wait for a drop in price before investing. Either way, SVB Financial Group will continue to fund some of the world’s largest tech companies and most exciting startups in Silicon Valley.
High Beta Tech Stocks
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Advanced Micro Devices is one of three American semiconductor companies on our beta stocks list. The company develops computer processors and other related technologies. Some of Advanced Micro Devices’ main products include motherboard chipsets, microprocessors, and graphics processors.
Their products are used in workstations, personal computers, servers, and embedded system applications. Advanced Micro Devices has a rather large market cap of $106.4 billion. They’re still traded for an impressively low price of just under $88 per share.
Advanced Micro Devices also has the highest beta value on our list thus far at 2.2. This beta stock has been on an upward trend since nearly 2015 and seems to have no ceiling. As more of our life becomes reliant upon digital technologies, companies like Advanced Micro Devices will be critical in providing the next generation of digital infrastructure.
NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA is another high beta semiconductor company. Like AMD, NVIDIA is also a multinational tech company. More specially, NVIDIA produces graphics processing units for use in gaming and professional markets. The company also produces ‘system on a chip’ units for the automotive and mobile computing markets.
NVIDIA is consistently on the cutting edge of new and developing technologies. This includes expanding its presence in the gaming industry, virtual reality, parallel processing capabilities, supercomputing sites, artificial intelligence, and more.
NVIDIA has a market cap of $336.87 billion, with a share price over $542. They have the smallest beta value on our list thus far at 1.42. Compared to Advanced Micro Devices, NVIDIA may be a bit more reliable of an option for conservative investors. NVIDIA hit its highest trading price in November of 2020 and hasn’t dropped much. This recent plateau could indicate a great time for investors to buy.
Lam Research Corporation (NASDAQ:LRCX)
Lam Research Corporation is another leading semiconductor company. The company designs, manufactures, and markets semiconductor processing units, which make integrated circuits. Their products are also used in wafer fabrication equipment.
Lam Research is based out of Silicon Valley and was founded in 1980. After Tesla, Lam Research is the second largest manufacturer in the Bay Area. The company holds a market cap of $72.94. Lam Research also currently has a stock price of nearly $510.
Lam Research currently has a reasonable beta score of 1.31. Although this beta score is higher than the S&P500 average, it’s still a good selection for the relatively conservative investor. The company reached its highest trading price in history in January 2021, so now could be a great time to invest while beta valuation is low.
Align Technology, Inc. (NASDAQ:ALGN)
Align Technology manufactures 3D digital scanners and clear aligners for orthodontics. Notably, Align Technology is the manufacturer of Invisalign, one of the popular clear teeth aligner systems in the world. Invisalign has more than 9 million users worldwide.
Align Technology also produces iTero which is a mouth scanner for dental practices. Both of these tools have been very successful for the company and have reflected in their stock performance. They currently have a market capitalization of $48.96 billion.
Align Technology is a high beta stock with a value of 1.72. Orthodontic care is an essential part of dentistry, which means there will be continued demand for the company’s services. Since March 2020, Align Technology’s share price has grown by more than 331%. Their performance has never been better. Keep an eye out for a drop in price.
IPG Photonics Corporation (NASDAQ:IPGP)
IPG Photonics manufactures fiber lasers. Their optical fiber lasers have a wide variety of applications, including materials processing, the medical industry, and the telecommunications industry. Based in Massachusetts, the company also has operations in Germany, Russia, and Italy.
Other products manufactured by IPG Photonics include diode lasers and fiber amplifiers. Altogether, the company has more than 25 facilities around the globe. This high beta selection has a market cap of $12.6 billion.
Currently trading for over $237 per share, IPG has a beta index score of 1.47. The company’s stock struggled from 2018 through the spring of 2020, but they made a great recovery in the later half of the year. However, their stock price has dipped slightly, meaning this could be the right time for a buy.
High Beta Mining Stock
Freeport-McMoRan Inc (NYSE:FCX)
Freeport-McMoRan is a mining company based in Arizona. The company previously had ties to the oil industry. Now, they’re only involved in mining. Freeport is now the world’s largest producer of molybdenum and one of the largest producers of copper. In 2019, copper accounted for 79% of the company’s sales.
Freeport has operations across 5 regions, including North and South America, Africa, Europe, and Indonesia. This great regional diversification helps to mitigate some of the regulations of environmental protection agencies. That said, the company has been involved in a number of environmental, human rights, and corruption scandals over the years.
The company has a market cap of $45.5 billion with a current share price of just over $31. Freeport has a beta index score of 2.23. This is one of the highest beta scores on our list, making it a great choice for aggressive investors. The company’s decision to move out of the oil industry was a smart one, and they have plenty of future potential.
Stock With High Beta
L Brands Inc (NYSE:LB)
Formerly known as Limited Brands, Inc., L Brands is an American fashion retailer. Based out of Ohio, the company’s flagship brands include Bath & Body Works, Victoria’s Secret, and Pink. The company made plans to sell the Victoria’s Secret portion of the business to a private equity firm, however, plans fell through. The CEO was replaced in May of 2020.
Still, in September of 2020, the company announced they would be selling a majority stake in Victoria’s Secret under a newly formed joint venture. L Brands has a market cap of $13.53 billion. Shares of L Brands currently trade for over $48 per share.
The company has a beta index score of 1.7, marking it as fairly volatile in comparison to the rest of the overall market. This is due to ongoing acquisitions and sales over the year. With eCommerce becoming an increasingly important aspect of our lives, L Brands’ brands will likely continue to perform well.
However, the company has struggled to increase its share price since 2015. Current conditions suggest investors are enthusiastic about the changes the company has made with ownership of the Victoria’s Secret brand. Share prices are currently at their highest point since 2018.
Should You Buy High Beta Stocks?
High beta stocks come with high risks, but they also have a huge potential for reward. Not all high beta stocks are created equal, so it’s important to do your research before making any investment decisions.
With high beta stocks with a rating of 1.0+, the higher you go from 1, the more volatile the stock becomes. Volatility often comes with huge returns, but it can also set you up for huge losses.
Which of the high beta stocks on our list interest you? You can check out these selections and more on WeBull. When you join the WeBull platform, you’ll get a few free stocks just for signing up!
High Beta Stocks: Final Thoughts
High beta stocks have huge potential, but they also come with plenty of risk. Investors should do their research before buying high beta stocks. Some industries are inherently volatile, which reflects in the stock market performance of these companies. It’s also common for stocks to experience volatility if they’ve struggled with public controversies or have had multiple acquisitions in a short period of time.
It can be difficult to figure out exactly why a stock is volatile. However, these stocks can be great for investors with a high risk tolerance, as they come with huge potential for returns.