A lot of great stocks are hiding in plain sight. Many stocks quietly outperform the market without generating much, if any, media attention. Oftentimes, these high-risk stocks are prone to volatility and big swings in their share price. Investors who have a high risk tolerance and are willing to be patient can earn a good return on these more risky investments.
Sometimes it is smaller volatile stocks that end up being multibaggers and lead to shareholders getting rich. Consider energy drink company Monster Beverage (NASDAQ:MNST). Twenty years ago, its stock was trading for 34 cents a share. Today, the share price is just under $50. That’s a gain of 14,000%. Two decades ago, most analysts dismissed Monster Beverage as a small company with a niche product and a risky stock. Taking a chance on certain high-risk stocks can pay off over time.
Here is rag to riches: three high-risk stocks that could make early investors rich.
Iron Mountain (IRM)
When it comes to artificial intelligence (AI) servers, Super Micro Computer (NASDAQ:SMCI) tends to get all the attention. But another company capitalizing on the opportunity with AI servers is Iron Mountain (NYSE:IRM). The company is structured as a real estate investment trust (REIT) and is mostly focused on data storage, back-up and recovery services, as well as records management.
However, Iron Mountain is also pushing into the AI server sector. Through an initiative called “Project Matterhorn” that was launched in 2022, the company is investing heavily in the development of data centers and servers to meet the AI needs of other companies. To that end, Iron Mountain has leased 124 megawatts of data center capacity. As for IRM stock, it has risen 60% in the last year, including a 29% gain so far in 2024.
Iron Mountain stock is not without risks. It’s currently at a 52-week high and has an exorbitant valuation, trading at 135 times future earnings estimates. Company insiders have also been offloading the stock lately. It does pay a generous quarterly dividend of 65 cents per share, giving it a yield of nearly 3%.
Hawkins (HWKN)
Hawkins (NASDAQ:HWKN) is a relatively small company based outside Minneapolis that specializes in chemicals. Its diversified chemical products are used for everything from ensuring clean drinking water and adding flavor to food to developing health supplements and pharmaceutical medications. The company has been in business since 1938 and today has operations in 27 states and nearly 1,000 employees.
That said, Hawkins remains a small company with less than $1 billion in annual revenues and a market capitalization below $2 billion. Still, the essential nature of its products has led HWKN stock to outperform the broader market. The company’s share price has risen 350% over the last five years, is up 82% in the past 12 months, and has gained nearly 30% so far in 2024. The company also pays a quarterly dividend of 16 cents per share, which it regularly increases. This is the type of small-cap stock that might be worth the risk.
Celsius (CELH)
A buying opportunity might have opened up in Celsius (NASDAQ:CELH). The energy drink company’s stock has plunged 34% over the past month and is trading nearly 40% below its 52-week high. The decline in CELH stock is due to concerns that the company’s rapid growth is beginning to slow. Sales figures show that Celsius’ energy drinks that are made from natural ingredients such as green tea and ginger have cooled.
Analysts are calling the steep drop in CELH stock during the last month an overreaction and overdone. Piper Sandler just reiterated a $90 price target and “buy” rating on CELH stock. The $90 price target implies 43% upside for Celsius’ shares. While sales of the energy drinks have slowed, analysts point out that they’re still growing at a 40% year-over-year clip, which is very strong.
Despite the recent volatility, CELH stock remains one of the best performers of the past five years, having gained 4,805% since 2019.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
