Stock to Buy

Best high beta companies to buy for long-term

Best high beta companies to buy for long-term

Understanding and examining the concept of beta is of utmost importance before walking into the world of best high beta companies which investors should buy for the long-term. Starting with the basics, beta measures stock’s volatility in comparison to the overall market or an index which that particular stock tracks. Market has beta value of 1 and other stocks are given the beta values on the basis of their relative volatility. Stocks which have the beta value of less than 1 will have the volatility lower than the market, while stocks which are more volatile than the market have beta value of more than 1. 

If an investor tracks beta value in isolation, he/she will have a hard time in making informed investment decisions. However, it gives significant data point for understanding and assessing price volatility of the stock against market. Stocks having low beta values are considered as ideal investments for turbulent times because these stocks are less prone to market fluctuations, making them relatively safe. Stocks which have higher beta values give greater opportunities for higher rewards, but these stocks have higher levels of risk. Such stocks are an excellent option for all the investment needs during market recovery and growth. These market is on the path of revival, current environment is more suitable to invest in best high beta companies. 

Invesco S&P 500® High Beta ETF is an ETF investing at least ~90% of total assets in the securities consisting S&P 500® High Beta Index. The Index is made up of 100 stocks from S&P 500® Index and these scrips have the highest sensitivity to equity market movements over previous 12 months. In the past 3 years, this ETF has delivered strong returns and has performed better than S&P 500 Index. ETF generates the return of ~20.15% against ~10.15% return for S&P 500 Index.

With this in mind, let us now have a look at some of the best high beta companies to buy for long-term.

1. Norwegian Cruise Line Holdings Ltd.

The company has been categorised as the world’s third-largest cruise company by berths and it operates ~28 ships throughout its 3 brands (Norwegian, Oceania, and Regent Seven Seas). The company offers both freestyle and luxury cruising. The company has a beta value of ~2.57. 

Financial results for 3Q ended September 30, 2023 have been released by the company, and it saw total revenue of $2.5 billion, which was the record for the company, and exhibits a rise of 33% against same period in 2019. Its GAAP net income came in at $345.9 million for 3Q.

It achieved adjusted EBITDA of $752 million and adjusted EPS of $0.76. These figures have exceeded guidance numbers of $730 million and $0.70, respectively. 3Q performance was supported by strong revenue performance and focus on cost reduction. 

Cumulative booked position for 4Q23 is at the record levels and at increased pricing. It remains within its optimal booked position on 12-month forward basis and at increased pricing. The company continues to see healthy consumer demand with cumulative booked position.

The company expects FY23 adjusted EBITDA of ~$1.86 billion, despite impact of global events such as wildfires in Maui and conflict in Israel. FY23 adjusted EPS is expected to be ~$0.73.

2. Wayfair Inc.

Based in Boston, Massachusetts, the company is a leading e-commerce company that is focused on sale of home goods and furniture items. The company’s stock has a beta value of 3.20. 

In 3Q, the company saw total net revenue of $2.9 billion, exhibiting a rise of $104 million or 3.7% year-over-year, with its US net revenue coming at $2.6 billion that increased $132 million or 5.4% year-over-year. Gross profit of the company came in at $917 million, or 31.1% of the total net revenue. Net loss was $163 million, while non-GAAP Adjusted EBITDA came at $100 million. 

3Q results exhibits the company’s strength as it reported positive adjusted EBITDA of $100 million, 2nd consecutive quarter of positive FCF and ~4% year-over-year revenue growth as a result of strength in orders. Active customers for the company totalled 22.3 million as at September 30, 2023, exhibiting a decline of 1.3% year-over-year. 

The company had cash, cash equivalents and short-term investments of $1.3 billion and total liquidity came in at $1.8 billion, which includes availability under revolving credit facility. 

3. Transocean Ltd

The company commands one of the largest deep-water and ultra-deep-water fleets across globe. The company’s stock has a beta value of 2.97. 

In 3Q23, total contract drilling revenues of the company came in at $713 million in comparison to $729 million in 2Q23. Revenue efficiency of the company came in at ~95.4% as compared to ~97.2% in the previous quarter. Adjusted EBITDA of the company came at $162 million in comparison to $237 million in the previous quarter.

Cash used in operating activities came in at $44 million during 3Q23, exhibiting a decline of $201 million against the prior quarter. This decline was mainly because of higher cash disbursements for preparing and mobilizing 7 rigs for contracts and timing related to interest payments.

For 6th consecutive quarter, the company increased its backlog, ending 3Q at $9.4 billion. 

Analysts at Morgan Stanley increased their price target on the company’s shares from $8.00 to $9.00, giving the stock an “equal weight” rating in the report dated October 17th. Piper Sandler increased its price target on Transocean’s shares from $5.00 to $7.00. Analysts gave the stock a “neutral” rating. 


The above best high beta companies have beta values of more than 1.0, healthy and stable financial position, positive ratings, and positive analyst price objectives. Portfolio of the Invesco S&P 500® High Beta ETF is presently heavily weighted by technology sector as over ~37% of the weight has been allocated to securities from IT sector. This is followed by consumer discretionary which makes up for ~19% and then financials with ~18% of the total portfolio weightage. 

While above are some of the best high beta companies to buy for long-term, investors are required to conduct their own due diligence before taking any position. 

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