These 2 Stocks Carry a Lot of Risk, But Their Upside Is Huge

BlackBerry is one of the stocks that has big upside, as it moves aggressively and intentionally to make the connect car a reality.

| More on:

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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.

More on Tech Stocks

Hourglass and stock price chart
Tech Stocks

1 Canadian Stock Ready to Surge Into 2025

There is a lot of uncertainty about the market in general as we move closer to the following year, but…

Read more »

stock research, analyze data
Tech Stocks

Apple vs. Shopify: Which Stock Is the Better Buy for the Next 3 Years?

Apple (NASDAQ:AAPL) and Shopify (TSX:SHOP) are great tech titans, but they're ending the year with huge momentum.

Read more »

Investor reading the newspaper
Dividend Stocks

Emerging Investment Trends to Watch for in 2025

Canadians must watch out for and be guided by emerging investment trends to ensure financial success in 2025.

Read more »

nvidia headquarters with grey nvidia sign in front with nvidia logo
Tech Stocks

If You’d Invested $100/Month in Nvidia Starting a Decade Ago, Here’s How Much You’d Have Now

Nvidia has helped long-term investors create generational wealth. But is the tech stock still a good buy right now?

Read more »

chart reflected in eyeglass lenses
Tech Stocks

Is Shopify Stock a Buy, Sell, or Hold for 2025?

Shopify (TSX:SHOP) still looks like a tempting growth stock going into a new year with strength.

Read more »

A shopper makes purchases from an online store.
Tech Stocks

The Smartest Growth Stock to Buy With $1,000 Right Now

Given its solid sales growth, improved profitability, and healthy growth prospects, Shopify would be an excellent buy.

Read more »

Representation of deep learning neural networks and connectivity
Tech Stocks

Opinion: This AI Stock Has a Chance to Turn $1,000 Into $10,000 in 5 Years

If you’re looking for an undervalued Canadian AI stock with huge upside potential, BlackBerry (TSX:BB) should certainly be on your…

Read more »

chip with the letters "AI" on it
Dividend Stocks

The Top Canadian AI Stocks to Buy for 2025

AI stocks are certainly strong companies, and there are steady gainers in Canada as well. But these three are the…

Read more »