Should You Buy Lottery Stocks?
(1:00) – Lottery Stocks: What Are They and How To Find Them?
(6:30) – Is Insider Buying A Good Sign To Start Investing?
(16:50) – Sectors Primed For Lottery Stocks: Retail and Pot Stocks
(23:00) – Are They Worth It?
(28:30) – Episode Roundup: NVAX, PIR, JCP, CRON, ACB, TLRY
Welcome to Episode #174 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
In this episode, Tracey is joined by Zacks Account Manager Niko Yokosawa and Zacks Product Manager Derek Kaplan, to discuss the interesting phenomena of “lottery stocks.”
What’s a Lottery Stock?
A lottery stock is a stock where if a particular event happens, the shares will either soar or crash back down to earth.
It’s an all-or-nothing type bet. Just like the lottery.
Can you play the lottery to only kind-of win? Of course not. That’s true of lottery stocks too. Investors have to be prepared to lose everything.
And while the odds may be against you when playing the lottery, you keep playing because of the dream of winning.
That’s true of lottery stocks as well. The dream of a big “win” is what drives investors.
Where Can You Find Lottery Stocks?
Often, lottery stocks are in the biotechs and drug stocks.
Tracey shares her tale of investing in Novavax NVAX), a drug company trying to bring an RSV vaccine to the market.
Novavax went to Phase III twice on its RSV vaccine. What could go wrong?
But lottery stocks can also be found in the beaten down retailers such as J.C. Penney JCP, which is trading around $1.30, and Pier 1 Imports, Inc. PIR which has sunk under $0.50 after another dreary earnings report.
Are Pot Stocks Lottery Stocks?
Lottery stocks are synonymous with a big payoff. For that reason, they are also risky.
Could the pot stocks be lottery stocks too?
Tilray TLRY was up as much as 400% at one point, with many talking about a pot stock bubble, before pulling back.
Aurora Cannabis ACB is another hot cannabis stock that went from $2 to $9.
Neither one has positive earnings yet.
What else should you know about the lure of the lottery stocks?
Listen to this week’s podcast to find out.
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Like playing the lottery, some stocks lure in investors with the promise of possible riches.