Stocks: Higher Risk, Bigger Payoff?
After putting themselves on a risk diet, investors recently have started showing more of an appetite for risk.
Not a tremendous amount, mind you, as financial markets remain dicey. But enough to make them start thinking about taking a flier on names that could provide big upside.
With that in mind, we put together this week's screen. To make sure these were attractive stocks from the get-go, we first narrowed our list to those stocks ranked 5 STARS (strong buy) under Standard & Poor's Stock Appreciation Ranking System, or STARS. Stocks with that designation are expected to outperform the broader market by a significant amount on a total return basis over the next 12 months, with the shares rising in price on an absolute basis.
Here's where the risk part comes in. We searched that list for stocks with an S&P Qualitative Risk Assessment of "high." A Qualitative Risk Assessment is a proprietary S&P metric that measures the S&P equity analyst's view of a given company's operational risk, or the risk of a company's ability to continue as an ongoing concern. The Qualitative Risk Assessment is a relative ranking to the S&P U.S. STARS universe, and is intended to reflect risk factors related to a company's operations, as opposed to risk and volatility measures associated with share prices.
Seventeen stocks made the cut. As a group, these stocks have a potential 12-month upside of 27%, according to the average difference between the company's share price at the time the screen was prepared and the S&P analysts' 12-month target price.
|MEMC Electronic Materials||WFR|
|Shanda Interactive Entertainment||SNDA|