Watch List: Four Stocks Moving Right Now

Mark SebastianMark SebastianMark Sebastian

If you’re into my free Profit Takeover e-letter, then you know I’m all about “asymmetrical returns.” “What are ‘asymmetrical returns?'” I can hear you ask.

Well, very simply, it means only taking a position in a stock or trade if it has a skewed risk/reward profile. That’s “skewed” as in skewed our way, taking unusually low risk for a shot at banking extremely high returns.

There are plenty of traders, and I speak from long experience here, that would risk $1 for a chance to make $1. On the surface, that doesn’t seem so bad; it even seems like it makes good sense. And, sure, if everything goes right, it can pay off OK.

I also speak from experience when I say there’s a much better way, where every dollar you risk can potentially return $2, or $5, or even $10 – 200%, 500%, 1,000% gains. Those are asymmetrical returns.

They’re not all that hard to find, either. I bring several to my readers every week, and we’ve had a shot at 110%, 107%, 132%, and more.

Now I’ve got four stocks and some promising trading ideas I want to share with you today…

Here Are the Stocks and Trades I’m Looking At

Here’s where I think the week’s best chances for asymmetrical returns are.

Vinco Ventures Inc. (NASDAQ: BBIG) is the new meme stock on the block, up 211% over the past five days. It’s a textbook short squeeze – stock volume, option volume, implied volatility, and share price are all increasing.

But folks, remember, like all meme stocks, this is a stock you trade, not a stock you invest in.

Perficient Inc. (NASDAQ: PRFT) is a stock that wasn’t on my radar until my colleague, Olivia Voz, host of “Money Morning LIVE,” did a volume profile on the stock last week.

Shares are up over 8% in the past five days, and like BBIG, this one’s got the making of a short squeeze. But be careful – because when this stock does turn around, it’s not going to happen slowly. This thing could flip on you quickly, like ripping off a band-aid – “up the stairs, down the elevator.”

Sundial Growers Inc. (NASDAQ: SNDL) is a pot stock through and through. It’s found its way onto my watch list after a series of short pops and squeezes. Right now, it’s only about $0.77, and it’s a name I’m interested in adding to my portfolio.

If you want to go the option route instead, I’d look at the October $1 call for about $0.07. This is the quintessential asymmetrical return play: It’s a dirt-cheap trade, and it will quadruple if SNDL goes to $1.30.

Ulta Beauty Inc. (NASDAQ: ULTA) reported great Q2 earnings this month, and I’m not surprised – my wife has probably kept this cosmetic chain up herself! She can’t walk in there without walking out with a wallet that’s about $200 lighter.

Traders seemed to fade the earnings on this one – and then, they bought the earnings fade. Go figure. From here, I see the stock going higher, and I’m looking at the October $390 calls for about $15.

Now, believe it or not, $15 qualifies as “expensive” in my book, but you can cut your risk by as much as one-third by selling the $420 calls against it, creating a call spread for about $10.

What can I say? Cheap is good – very good. Some of the biggest profit potential on the market can be had for a fraction of the price of the biggest marquee companies – stocks that can cost anywhere from under a buck to less than $10. Incredibly, it’s like they’re blacklisted; you don’t hear much at all about this rare class of stocks. I know one Wall Street firm that’s basically prohibited its brokers from offering these shares to customers. That doesn’t change the fact that exceptional, top performers here have seen 2,953%… 4,801%… 12,754%… even 22,207% in less than a year. My friend Shah Gilani has more on these right here…

Follow Money Morning on Facebook and Twitter.

Join the conversation. Click here to jump to comments…

Mark SebastianMark SebastianMark Sebastian

About the Author

Browse Mark’s articles | View Mark’s research services

Leave a Reply

Your email address will not be published.