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Despite raging inflation and warnings from some prominent investors that the stock market is dangerously overheated, JPMorgan still expects a boost from “the January effect."
The phrase refers to the belief that the market’s best month tends to be the year’s first.
This month, JPMorgan expects high-beta stocks with more volatility than the S&P 500 to outperform the market.
The bank’s analysts say high-beta stocks entered an “outright bear market” in 2021. That’s not because of a lack of value; investors have been selling them off in favor of stocks that offer lower volatility.
The low demand/high upside dynamic means “the January effect” could “be even more pronounced this time around” for high-beta stocks, according to JPMorgan analysts.
If they’re right, these three stocks might be in for a leap. And perhaps you’ll decide that one is worth jumping on with some of your extra cash.
Plug Power (PLUG)
Plug Power is at the forefront of the hydrogen fuel cell industry. By powering cars, trucks and large facilities like data centers and hospitals, HFC companies figure to be central to the planet’s sustainable future.
Plug also produces liquid hydrogen and projects that it will be the top U.S. producer of sustainable liquid hydrogen by late 2023 or early 2024.
That’s the good news. Now the bad.
Plug’s Q3 earnings fell well short of expectations, while its net loss in the quarter hit $107 million, up from $65 million a year earlier. Plug has told investors that its gross margin remains under downward pressure from elevated production and fuel and service costs.
Plug’s share price is down about 23% in the last month alone. But if you believe in the future of HFCs, or that ESG investors might buoy the company, this may be your chance to get in for cheap.
Moderna (MRNA)
Even after providing vaccine jabs for millions of people in 2021, Moderna has seen its stock slide about 18% in the last month. It’s down about 48% since peaking at $484.47 in August.
Investors appear doubtful of Moderna’s ability to maintain the COVID-driven momentum that’s put it on track for $17 billion in sales in 2021.
But the majority of Americans have not received their boosters so far, and many medical experts predict we’ll need more shots. And mRNA-based shots like Moderna’s may be easier to adapt to new variants of COVID that might emerge.
Forbes has valued Moderna stock at $300 per share, which implies about 17% worth of upside if you were to buy at recent prices.
But remember: If the swings for individual companies’ stocks are too risky for your taste, you could always fall back on a more diverse portfolio — a popular app even lets you build one with your spare change.