Hargreaves Lansdown (LON:HRGV) is a large cap stock in the Investment Management & Fund Operators industry that we classify as a 'High Flyer' stock due to its blend of high quality, high momentum, and low value.
This combination of factors is great when earnings go up but bad when a company stumbles - the higher they rise the harder they fall, after all.
Hargreaves Lansdown's (LON:HL.) share price volatility
We can find out just how risky (or more precisely, how volatile) Hargreaves' share price is by applying Stockopedia’s RiskRatings system, which divides stocks into five groups according to stock price volatility. The five classifications (from most to least volatile) are:
- Highly Speculative (30% of the market),
- Speculative (25% of the market),
- Adventurous (20% of the market),
- Balanced (15% of the market), and
- Conservative (10% of the market)
Hargreaves Lansdown is an adventurous stock. This means that the group is in the more volatile half of the market in terms of stock price volatility, as might be expected of a High Flyer. Those looking to invest here should be ready for a potentially bumpy ride.
One thing in Hargreaves Lansdown’s favour is its above average five-year return on capital employed figure of 83.4%. Being consistently profitable to such a degree over multiple years suggests that Hargreaves Lansdown can back up its favourable factor exposures with some kind of economic moat and, hopefully, make any share price volatility more bearable in the short term.
Disclaimer: These articles are provided for information purposes only. The content is not intended to be a personal recommendation. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. The author has no position in the stocks mentioned, unless otherwise stated.