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3 high-risk / high-reward stocks to buy today

Is it wrong to make a speculative investment in your share portfolio?

I don’t think so.

Provided you maintain a well-balanced portfolio with a number of core stocks (i.e. companies such as Telstra Corporation Ltd (ASX: TLS) and BHP Billiton Limited (ASX: BHP)) there’s no reason why you can’t take on a bit more risk with smaller companies outside the S&P/ASX 200 Index (INDEXASX: XJO).

However, as a rule of thumb, never invest more than you can afford to lose and be prepared for volatility because as you’ll see below, the stock prices of high-risk investments will swing wildly day-to-day. Here are three high-risk / high-reward investments which I have my eye on.

1. Donaco International Ltd (ASX: DNA) is a hotel and casino operator with its flagship operation in Lao Cai, Vietnam (near the Chinese border). Donaco recently opened its Aristo International Hotel, taking it from a 34-room hotel and casino to a brand new resort complex with 428 rooms. Whilst this seems great (and it is), it should be noted Vietnamese citizens cannot gamble and Donaco relies on middle-market VIP patrons from China to cross the border and gamble at the casino. Recent political tensions between the two countries resulted in a selloff of Donaco’s share price (although it is now recovering).

2. Doray Minerals Limited (ASX: DRM) is a West Australian gold miner with one of the highest grade mines in Australia, named Andy Well. It has enabled the company to keep costs low, pay down debt at a rapid pace, acquire highly prospective tenements in the Murchison gold region (which can utilise existing mining infrastructure) such as Gnaweeda, and fund new exploration opportunities. The risk for Doray shareholders is its small reserve life. However, the company’s management appear competent and capable of extending the life of Andy Well. Shares trade on a forward P/E ratio of just 3.7.

3. Newsat Limited (ASX: NWT) describes itself as, “Australia’s largest pure-play satellite communications company” and hopes to fill its exclusive orbital slots with its Jabiru series of satellite in coming years. However, the company’s teleport business (which is a reseller of satellite data) recently announced lower-than-anticipated revenues and earnings because they lost a key contract with the US military. Whilst the teleport business has never been the focus of long-term investors, its share price has been sold down as a result of the announcement, as well as a number of other reasons. These include a delayed launch of the Jabiru-2 satellite and “cost reductions”, which included a number of directors leaving the company. Until very recently Newsat’s share price had fallen rapidly but has rebounded 44% in the past 10 days.

Our top 3 high-risk/high-reward resources stocks – Yours Free!

I currently own both Donaco and Newsat shares (I bought in at a much higher price than today’s!), but remain cautiously optimistic about their future. I think Newsat offers the greatest upside potential of the three stocks but also comes with the greatest amount of risk.

However, if you don't mind chancing your hand on the resources sector, our top analyst recently identified '3 high-risk/high-reward stock picks' you should consider adding to your portfolio. One is already up over 100% since he tipped it! Simply, click here to download your copy of, "3 'Under-the-Radar' Resources Companies That Could Win Big" -- FREE!

Motley Fool Contributor Owen Raszkiewicz owns shares of Newsat Limited and Donaco International Limited.  

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