Best Short-Term Stocks

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The stock market is a volatile place, and many investors look for long-term opportunities to manage the constant noise. However, short-term opportunities in the market do present themselves, although it can be challenging to know which stocks to invest in for the short term and how to choose them. 

Benzinga looks at some of the best short-term stocks you can invest in that are positioned for growth with the potential to generate returns.

5 Best Short-Term Stocks

The phrase short-term stocks can be vague. In general, they are stocks not held over a prolonged period, that are actively traded. These stocks could move higher over a short period of time. Choosing the right short-term stock or stocks is not easy, but you can take a look at some of these possible buys.

1. Delta Air Lines Inc. (NYSE: DAL)

Delta Air Lines is on a strong run this year, as demand for domestic and international travel remains strong despite economic headwinds consumers have had to contend with. However, its price is not yet at pre-pandemic levels. 

Demand continues to remain robust in the summer of 2023, and headwinds such as inflation, while not out of the way yet, are easing, providing the potential for Delta shares to continue climbing in the near- to mid-term.

As many as 19 analysts assign a Buy rating and 3 an Overweight rating for Delta Air Lines shares with a consensus price target of $53.72.

2. Cloudfare Inc. (NYSE: NET)

San Francisco, California-based Cloudfare has been on a slide since the end of 2021 after a rally during the pandemic. However, it has found some stability and is now up more than 50% so far this year. The decline has made its risk-reward more compelling.

As a result, the majority of analysts are bullish on the stock, with 15 holding a Buy rating, 2 with an Overweight rating, 12 analysts with a Hold and 3 as a Sell. 

3. Micron Technology Inc. (NASDAQ: MU)

After a rally since the start of the year, Micron shares have retreated slightly, even though it recently reported better-than-expected results. However, the company is facing headwinds, such as the memory inventory correction and ongoing demand weakness in certain sectors, which short-term investors need to watch out for. 

Even so, it is still one to watch or a short-term move higher, with some analysts believing the stock is no longer reacting to headwinds. Overall, 24 analysts have a bullish rating on the stock, with 6 at Hold and 1 at Underweight. The average 12-month price target is $68.70.

4. Visa Inc. (NYSE: V)

Despite macroeconomic pressures, digital payments firm Visa continues to perform well with revenue continuing to climb. Even during high inflationary periods, Visa is able to perform well because of its payment model that takes a small cut of each transaction that occurs on its network. 

The company benefits from the travel demand rebound and given that this summer a further recovery in international travel is expected, Visa should benefit. In addition, the company has a solid track record.

While it is up over 15% so far this year, it is one for short-term investors to consider. Analysts are positive too, with 23 out of 28 holding a bullish view.

5. ON Holding (NYSE: ONON)

ON Holding is up 96% in 2023. While the stock dropped sharply not long after its initial public offering (IPO) in 2021, it has since staged a comeback and is now sitting well above its IPO price. The company’s running, hiking and athletic shoes have become increasingly popular with consumers, helping to provide its share price with momentum. 

Analysts believe the company is continuing to take market share, and they see earnings growth ahead for the company, with 17 Wall Street firms currently having a bullish rating on the stock (1 at Hold and 4 at Sell).

What is a Short-Term Stock?

A short-term stock is a security that is predicted to be held for a short period of time, generally less than one year. Usually, short-term traders will focus on stocks they believe are expected to experience significant price movements in the near term. The reasons for choosing short-term stocks can include the anticipation of a strong earnings report, the reaction to upbeat earnings, economic news, speculation or the anticipated benefit or negative response to political news.

While the stocks above have been chosen because they are expected to rise, investors can also choose to short other short-term stocks based on an anticipated move lower. 

Benefits of Investing in Short-Term Investing

One of the benefits of short-term stocks includes the potential for increased returns. They offer the potential for higher returns compared to long-term stocks because short-term traders can take advantage of short-term market trends, which can lead to significant gains if the price spikes in their favor. 

Another benefit is liquidity, as short-term stocks are typically more liquid than long-term stocks. It means they can be bought and sold more easily, making it easier to exit a position if necessary.

Short-term traders benefit from having more flexibility compared to long-term investors as they are not tied to a particular stock for a long period of time. This strategy can be beneficial if market sentiment shifts against their current trade, allowing them to sell their positions and move on.

Risks of Short-Term Investing

Short-term stocks are inherently riskier than long-term investing as there is a greater chance of losing money if you make a bad judgment call. For many, it is harder to judge a stock in the short term as there are aspects such as general price volatility and news that impact the share price. There are other risks as well, as short-term trading may result in higher broker commissions and fees, while it also requires a greater time commitment because you need to continually watch the price and market. 

If you are interested in short-term stocks, it is vital to research and understand the characteristics and aspects you will have to deal with.

Where to Invest in Short-Term Stocks

You will need a broker to invest in short-term stocks. However, different trading and investing styles better suit particular platforms, so it is important you choose the right one for short-term stock positions. Here is a table of some of the most suitable brokers for short-term stocks.

Are Short-Term Stocks Worth the Added Risk?

It is difficult to say whether short-term stocks are worth the added risk, and in many instances, it will depend on the investor’s individual characteristics. The increased risk can result in poor execution or a lack of understanding of near-term factors impacting the stock.

In some instances, the fundamental and technical data provided will be compelling and too good to ignore, and the potential reward may outweigh the risk. However, it is best to gather data and a solid understanding before jumping into short-term stocks. 

Frequently Asked Questions 

Best Short-Term Stocks Methodology

The best short-term stocks were chosen based on factors that indicate that the company should enjoy growth and price appreciation. For example, given the ongoing travel recovery, Benzinga included companies such as Delta Air Lines and Visa.