Every investor knows that volatility can strike at any time due to a variety of economic and geopolitical factors. Market participants saw that last month when the S&P 500 nosedived 6.6% in its worst May performance since 2012 and second-worst since the 1960s. But overall market volatility is hardly important without pinning it against individual stock volatility, and that’s exactly why the beta metric is so important to consider when picking stocks.
Beta measures how much an individual stock responds to volatility in the broader market indexes. It helps investors understand whether a stock moves in the same direction as the rest of the market and how volatile or risky it is compared to the market. A beta of 1.0 means a stock moves mostly in lockstep with the market. If the beta is less than 1.0, it’s less volatile than the broader market, while a beta greater than 1.0 indicates it’s more volatile. For instance, if a stock has a beta of 1.4, it’s assumed to be 40% more volatile than the broader market.
All of this makes sense when considering how stocks with the highest betas are often either in historically volatile sectors or trade at low share prices. Most of the firms on the list are small caps, with the majority being in the highly volatile pharmaceutical and biotech sectors.
Here are five of the most volatile stocks on the Nasdaq and New York Stock Exchange (NYSE), ranked by average monthly beta over the last three years…
No. 5: Blink Charging Co. (BLNK)
Blink is an electric vehicle (EV) company primarily providing EV charging equipment that drivers use to recharge at various locations. The firm also offers a cloud-based software called Blink Network, which operates and tracks Blink’s charging stations and associated charging data, as well as enables property owners, managers, and parking companies to remote monitor and manage their EV charging stations and payment processing.
Shares of BLNK have traded under $10 since late 2017, making the stock more susceptible to huge percentage swings. As of Tuesday, June 11, BLNK has a beta of 5.36 and is therefore about 536% more volatile than the broader market. Shares are up more than 52% this year from $1.72 to $2.62 but are down roughly that same percentage from $5.46 over the last 12 months.
No. 4: Zynerba Pharmaceuticals Inc. (ZYNE)
The least volatile pharma company on the list is Zynerba, which develops cannabinoid-based treatments for rare psychiatric disorders like Fragile X syndrome (FXS) and autism spectrum disorders (ASDs) that affect children and adolescents. The company’s highest profile treatment is Zygel, the first and only pharmaceutically produced cannabidiol (CBD) treatment that’s currently in Phase 2 clinical trials.
ZYNE has seen wild swings in the last six months, going from a low of $2.89 per share on Dec. 21 all the way to a high of $15.50 on May 16. It has a beta of 5.45 and is up a whopping 354.5% year-to-date, gaining nearly 17% during Tuesday’s session alone.
No. 3: Pier 1 Imports Inc. (PIR)
Pier 1 is a retail chain that sells furniture, housewares, gifts, and seasonal products. As of the first quarter, there are roughly 973 Pier 1 locations in the United States and 75 locations in Canada. The company is also one of the oldest publicly traded retail companies in the country, launching its IPO in 1970 and joining the NYSE in 1972.
With a more than 135% gain in 2019, PIR is one of the year’s top-performing retail stocks. However, shares have swung wildly this year from a low of $0.31 all the way to a high of $1.42. The stock has a beta of 6.08, which is more than more than six times the general retail sector’s average beta of 0.91 as of January.
No. 2: PLx Pharma Inc. (PLXP)
PLx is a small-cap pharma company based in Houston, Texas. The firm’s primary drug candidates are two formulations of aspirin called Vazalore – in 325 mg doses – and Vazalore – in 81 mg. These are meant to reduce acute gastrointestinal (GI) side effects as well as provide an antiplatelet – used to increase circulation – for cardiovascular disease prevention.
Shares of PLXP have surged more than 226% in 2019 from $1.53 on Dec. 31 to $5 on June 11. The stock’s beta is 6.37, starkly contrasting the industry average of 1.47 also reported in January.
No. 1: Microbot Medical Inc. (MBOT)
The stock on this list with the highest beta is Microbot Medical, which specializes in “micro-robotic” technologies used for minimally invasive surgery. These include TipCAT and ViRob, with the latter used to deliver medication to precise locations or cavities in the body. In April, the company reported it had 32 patents issued for its products and 19 pending patent applications.
Shares of MBOT stock have gained 161% this year from $1.72 to $4.49. The company has a sky-high beta of 9.49 as of June 12.