With low rates investors choose risk and reward, but will they stay?

By Robbie Citrino for Kapitall.

With the announcements that the Federal Reserve will continue their current tapering strategy and keep interest rates low as inflation picks up, shares of high-risk stocks such as Netflix (NFLX), Tesla (TSLA), Fireeye (FEYE), and Solar City (SCTY) all jumped.

This switch to a greater risk alternative, over bonds and other vehicles, displays how shareholders are seeking out options that will continue to produce results as the bond market remains dry and unfruitful.

Since the Fed didn't exceed the market’s prediction with its bond purchase cutback, these stocks have seen a significant rebound from lows reached in April and May, during which time investors prepped for a switch to more stable alternatives.

From their respective 2014 troughs, Tesla and Solar City have rebounded 27% and 42% respectively, while the broad  S&P 500 (SPX) gained a less eye-popping 4.7%.

The Russell 2000, an index of small-cap companies that's traditionally somewhat riskier but with higher growth potential, has gained almost 8% since its low in May. Flirting with record highs, this index has also expanded its price-to-earnings (P/E) ratio almost 40% (from 59 to 83) over the past year. 

The only question now is how long it will last. Could we see an increasing demand for risky tech, or will investors shy away as rates increase?

We built this list of high-beta stocks with high gains on the news. Do you think they'll continue to outperform? Use the list below to begin your analysis.

Click on the interactive chart to view data over time. 

 

1. FireEye, Inc. ( FEYE, Earnings, Analysts, Financials): Provides products and services for detecting, preventing, and resolving advanced cybersecurity threats. Market cap at $5.28B, most recent closing price at $37.72.

Beta: 3.45 vs industry average of 1.04

 

2. Netflix, Inc. ( NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $26.18B, most recent closing price at $441.39.

Beta: 2.46 vs industry average of 1.04

 

3. SolarCity Corporation ( SCTY, Earnings, Analysts, Financials): Designs, installs, and sells or leases solar energy systems to residential and commercial customers, and government entities in the United States. Market cap at $6.32B, most recent closing price at $67.69.

Beta: 3.19 vs industry average of 1.04

 

4. Tesla Motors, Inc. ( TSLA, Earnings, Analysts, Financials): Designs, develops, manufactures, and sells electric vehicles and advanced electric vehicle powertrain components. Market cap at $28.19B, most recent closing price at $227.79.

Beta: 2.44 vs. Industry Average of 1.04

 

(List compiled by Robbie Citrino. Monthly returns sourced from Zacks Investment Research, all other sourced from Finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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