BB:CC - These 2 Stocks Carry a Lot of Risk But Their Upside Is Huge
2024-01-29 10:30:00 ET
In this article, I will go over two stocks that I believe have really significant potential. They are risky stocks, but the flip side to that is that the reward potential is life-changing. So, I’m investing in these stocks with the full knowledge that things could go very wrong with any one of them. This is why I limited each of these positions to a small weighting in my portfolio. If they work, I’ll benefit from the big upside. But if they don’t work, the loss to my overall portfolio will be bearable.
Let’s explore.
BlackBerry stock
A lot has happened with BlackBerry ( TSX:BB ) recently. But the most important one is the fact that the company has been in search of a way to maximize the value of its two businesses: the cybersecurity business and the Internet of Things business.
With a new chief executive officer at the helm, all options are open. For now, however, the focus is on squeezing efficiencies out of the businesses and fully separating them. They’ll be optimized and streamlined to build stronger standalone businesses.
My bullish thesis for BlackBerry revolves around its Internet of Things business. BlackBerry’s embedded systems business is all about machine-to-machine connectivity in the Internet of Things world. We see this demand for connectivity in many different industries, such as the medical industry and the industrial industry. But no other industry is as fast-growing and lucrative for embedded systems as the auto industry. Here’s where things get really interesting.
Last quarter, BlackBerry’s Internet of Things business had its strongest quarter ever. Revenue increased 12% sequentially and 8% versus last year to $55 million. This was driven by the automotive business, which saw continued design win momentum add to the backlog. Looking ahead, despite some macro headwinds, such as auto strikes, BlackBerry expects up to 20% revenue growth in the fourth quarter.
BlackBerry’s stock price performance has been disappointing, as results have not ramped up as hoped. Yet, the potential remains, and this is why I view BlackBerry stock as a great holding for strong upside.
Well Health Technologies
My other high-risk stock recommendation is Well Health Technologies ( TSX:WELL ). Well Health is an omni-channel digital health company. It offers digital healthcare solutions for medical clinics and health practitioners globally. It’s also Canada’s largest outpatient medical clinic owner/operator and leading telehealth service provider.
Unlike BlackBerry, Well Health has had no difficulties achieving revenue growth. In contrast, Well Health continues to post record revenue growth as the momentum remains strong. In its latest quarter (Q3/2023), Well Health posted a 40% increase in revenue to $204.5 million. This was attributed to organic growth of 16%, as well as acquisitions.
As the company has done for many successive quarters, guidance was once again increased. The company now expects revenue of $755 million to $765 million in 2023 and more than $900 million in 2024. This equates to a 34% revenue growth rate in 2023 and a more than 18% revenue growth rate in 2024. Note that these estimates do not include unannounced acquisitions, and management has stressed that its pipeline is very strong.
Despite the fact that Well Health is reporting net losses, the stock has huge long-term potential. This is because the demand for digital tools in the healthcare sector is strong. Well Health is investing heavily in its growth, and this, in my view, is setting it up for big rewards. Similarly, shareholders who invest in Well Health stock today are likely to see big rewards in the long run.
The bottom line
Investing in risky stocks is a necessary part of investing, in my view. The two stocks I’m recommending in this article do have huge potential but also elevated risk. BlackBerry’s stock price remains below $4, and Well Health’s also remains below $4, making this an attractive entry point for both.
The post These 2 Stocks Carry a Lot of Risk, But Their Upside Is Huge appeared first on The Motley Fool Canada .
Fool contributor Karen Thomas has positions in Blackberry and Well Health Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2024