Every investor has had their ‘what if’ moments…
You know the feeling. You see a stock price soar 500% in a year and regret not buying in.
Of course, many of these stocks are highly speculative in nature. That is, they sit very high on the risk-reward curve. A catch-22. It’s either all, or nothing.
However, if they things go according to plan (they rarely do), the rewards could be life-changing…
3 speculative stocks with loads of upside potential
1. Liquefied Natural Gas Limited (ASX: LNG). The junior resources company plans to construct two LNG tolling facilities, Magnolia and Bear Head, in North America. Following in the footsteps of larger companies gone before it, LNG’s experienced management team is positioning the company to benefit from rising demand for energy, without exposing it to commodity risks. Although the company’s share price has risen 900% this year, if everything goes according to plan, it could prove to be cheap.
2. Admedus Ltd (ASX: AHZ) is a diversified biotechnology company which is in the process of marketing and selling its flagship technology, CardioCel. CardioCel is a patch-like regenerative tissue technology approved for use in children (and adults) with heart defects. Admedus is also pursuing a vaccines program, lead by Professor Ian Frazer, for infectious diseases and cancers such as Herpes Simplex Virus and Human Papillomavirus. Whilst this sounds great, many companies have come and gone trying to do the same thing, so investors should know the risks before buying in.
3. NetComm Wireless Ltd (ASX: NTC) is a small-cap technology company. Unlike Admedus and LNGL, NetComm has recently swung to profitability and looks likely to continue posting larger profits in the near future, as it continues its push into machine-to-machine (M2M) communication. NetComm is run by competent management with much experience in the industry. Although the M2M market is growing rapidly, it is highly competitive. Nevertheless, keep an eye on this one.
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I don’t mind the occasional punt on small or micro-cap stocks, but the reality is these punts should be kept to an absolute minimum. Indeed, these companies (perhaps with the exception of NetComm) are high-risk/high-reward so the potential for all-out capital loss is very real. So, by all means, allocate a small portion of your portfolio to these types of situations, but only after you’ve developed a strong foundation filled with solid companies.
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As of 2.11.2020
Motley Fool Contributor Owen Raszkiewicz owns shares of Admedus and Liquefied Natural Gas Limited.
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