Investing in Speculative Stocks

James Ryan Jonas

Stocks can produce huge capital gains if the right bets are made. Those who want to earn quicker profits use a high-yield, high-risk strategy known as “Speculative Stocks investing” wherein they focus on so-called speculative stocks that could produce the quickest bang for their buck.

This strategy is one of several trading strategies that can be employed to make money in the stock market. While others follow a more conservative “Buy and Hold strategy” or a cautious “Cost Averaging strategy”, those investing in speculative stocks are hoping to make quick trades that could result in huge gains.

Case in point, in the past 9 months this year, speculative stocks expectedly produced the highest return among all stocks traded in the Philippine Stock Exchange (PSE).

In our article about the PSE stocks performance in the 3rd Quarter of 2014, we saw that the “best performers” are the speculative stocks, producing gains of at least 100% — effectively doubling one’s money — and even reaching 500% or 600% returns in just 9 months.

Here’s a summary of the highest stock gainers in the PSE from January to September 2014. Notice that majority of these high-yielding stocks are speculative stocks.

Biggest Gainers in the PSE, January to September 2014

RankStock CodeCompanyGain (Loss) from Jan-Sept 2014Beginning Price (Jan 2014)Last Traded Price (Sept 2014)
1CATCentral Azucarera de Tarlac+612.50%16.00114.00
2PLCPremium Leisure Corp.+500.00%0.281.65
3ISIsland Information & Technology Inc.+465.00%0.040.23
4MEDMEDCO Holdings+268.42%0.190.70
5MAXSMax's Group+242.38%7.5525.85
6RPLiRipple Inc.+206.45%11.7836.10
7NIKLNickel Asia Corp.+194.74%15.2044.80
8DAVINDa Vinci Capital Holdings+168.89%0.902.42
9DDDoubleDragon Properties+160.00%3.007.80
10CMTSoutheast Asia Cement Holdings+141.75%1.032.49
11MARCMarcventures Holdings+135.39%3.087.25
12VMCVictorias Milling Co.+126.34%2.054.64
13CEICrown Equities Inc.+125.32%0.080.18
14APXApex Mining Co.+115.91%1.763.80
15ATNBATN Holdings B+114.96%1.272.73
16CICConcepcion Industrial Corp.+113.63%19.1941.00
17ATNATN Holdings A+101.52%1.322.66
18MRCMRC Allied Inc.+101.41%0.0710.143
19DNLDNL Industries+100.00%6.4912.98
20PHAPremiere Horizon Alliance Corp.+96.83%0.320.62

For instance, one speculative stock — Premium Leisure Corp. (PLC) — rose 500% in the past 9 months. That means if you bought P10,000 worth of PLC from the start of January this year, this money would now have grown to P60,000 by the end of September.

Similarly, if you held on to another speculative stock such as Da Vinci Capital Holdings (DAVIN), your money would have increased by 168.89%. This means an investment of P50,000 would have become P134,445 during the 9-month period.

Speculative Stocks are risky

Speculative stocks can surely produce huge profits but they come with huge risks as well. Investing in speculative stocks is not a walk in the park and, in the same way that one can be a multi-millionaire with speculative stocks, one’s capital can also be wiped out instantly if the wrong speculations are made.

If you want guidance on how to better invest in speculative stocks, you can turn to local stock market resource PinoyInvestor, a premium membership portal that shows recommendations, opinions, and stock picks by several top stock brokers in the Philippines.

Last week, PinoyInvestor released a Special Report analyzing 10 popular speculative stocks in the PSE, complete with broker’s recommendation, Target Prices and evaluation of financial condition (see sample table below).

Here’s an excerpt from the Speculative Stocks special report:

With high yield comes high risk, so take note that investing in speculative stocks may NOT be for everyone. Assess again your Investment Objective. If you believe you are a long-term investor who aims to preserve capital or is not comfortable with the idea that your portfolio can incur huge losses, speculative stocks may not be for you.

However, if you understand what speculative investing is and are aware of the risks that go with it, this detailed analysis of Ten (10) Speculative Stocks by our partner broker Angping & Associates Securities Inc. will definitely be of great value to you.

Click here if you want to get this Special Report on Speculative Stocks.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.