After a record-setting year of calm in the stock market in 2017, volatility has become the norm in 2018. The CBOE Volatility Index (VIX), a.k.a. the investor “fear gauge,” spiked above 37 in the first week of February, its highest point in more than five years. It was a sign of things to come: while the VIX is lower now, it’s still well above normal levels at 24 as of this writing. That doesn’t mean there aren’t plenty of good investments still out there – at least once the current sell-off subsides. But it does mean that the most volatile stocks today are virtually untouchable right now.
I originally compiled this list of the most volatile stocks late last year, when the VIX was at record lows and stocks at all-time highs. Interestingly, the list hasn’t changed much now that the market has become more unpredictable, which shouldn’t be much of a surprise. Stocks that are volatile in calm waters are sure to become even more volatile when things get choppy.
To screen for the most volatile stocks today, I looked for large-cap stocks with a beta of at least 2—meaning they’re twice as volatile as this already volatile market. And I stuck with U.S. companies since, as with small-cap stocks, volatility and unpredictability are more common in emerging market stocks.
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Despite the topsy-turvy climate, only a few came across my radar in this search, so these stocks are truly outliers—wild and unpredictable even by the standards of a suddenly wild and unpredictable market. Until they settle into some sort of predictable pattern, I’d avoid these up-and-down stocks at all costs.
So, without further ado, here are the three most volatile stocks today.
Volatile Stock #1: Nvidia (NVDA)
Not long ago, this was one of the hottest stocks on the market. As in, exactly a month ago! Shares of Nvidia, which makes chips for the mobile, gaming and automotive markets, exploded from 2016 through the first nine months of 2018, zooming from 32 to a high of 289 earlier this month. But my how things have changed: it’s down 32% in October alone, trades well below its 200-day moving average, and has a beta of 2.05. A one-month chart paints the bleak October picture.
A month from now, perhaps NVDA will be buyable again. But right now, it’s a falling knife.
Volatile Stock #2: Workday (WDAY)
Cloud computing stocks have been among the hardest-hit sectors this month, and WDAY is leading the plunge. A specialist in software solutions for financial management, human resources and planning, shares of Workday are down 14% this month and 20% in the last two months. Sunday’s IBM-Red Hat merger could spark a turnaround in cloud computing stocks – indeed, WDAY has rebounded a bit after bottoming at 120 last week. But with a beta of 2.15, and a chart that looks like this, I wouldn’t touch it…
Volatile Stock #3: Freeport-McMoran (FCX)
We’re generally not big on mining companies here at Cabot, and Freeport-McMoran is no exception. The reasons are simple: miners are too dependent on the prices of the precious metals they mine, making them unpredictable. Though gold prices have been trending in the right direction in recent months (as they often do when stocks are in a slump), the price of copper—which Freeport-McMoran mines heavily—is way down. It’s no coincidence that FCX stock is down too, tumbling a whopping 41% since the start of the year.
With a 2.53 beta to match, I’d say FCX is pretty untouchable even by gold stock standards.
Bottom Line on the Most Volatile Stocks Today
As NVDA in particular reveals, there’s a thin line between being a good growth stock and a stock that’s too volatile to trust. A mere month ago, NVDA was one of the best performing stocks on the market, and was a regular recommendation in our Cabot Top Ten Trader momentum-stock advisory, appearing three times in 2017 and once this year, at the beginning of September. Since then, it’s been a bumpy ride. In a market that until recently featured so many good, reliable growth stocks (and still does, in the larger picture), it’s simply not worth having volatile, unpredictable stocks in your portfolio.
A few months (or perhaps even weeks) from now, a couple of these stocks may have demonstrated enough momentum to be worth the short-term investment. For now, though, they’re among the most volatile stocks today. And that means they’re not worth the risk.
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post has been updated from an original version, published in 2017.