Editor’s Note: This article was updated on June 18 to update some information about Atomera.
Meme stocks are among the hottest equities on Wall Street. Shares of such firms typically see a surge in activity and price in a short period of time, helped by followers of social media platforms like Reddit’s r/WallStreetBets or Twitter (NYSE:TWTR). These traders’ collective purchases mean a massive short-squeeze in a matter of days. As a results, these stocks smash intraday records in price moves. Knowing which meme stocks to buy before they go big is powerful knowledge.
So far in 2021, several of the best meme stocks have had impressive gains for long-term shareholders:
- AMC Entertainment (NYSE:AMC) — up about 2,500% year-to-date (YTD)
- Blackberry (NYSE:BB) — up about 100% YTD
- GameStop (NYSE:GME) — up about 1,000% YTD
Given the interest in these high risk/high return names, I’ll discuss seven other meme stocks today.
One common denominator of the wild price swings in meme stocks is that buyers typically ignore the fundamental numbers of the business. In other words, while analysts are critical about the metrics, the online community rushes to buy the stock.
These businesses take advantage of intermittent meme stock rallies. Despite flagging earnings and in most cases poor income levels and earnings numbers, rallies of 30% or more have become typical intraday. That’s the power in numbers — when enough retail traders put their money into any of these names, the momentum becomes powerful.
But in the long run, the fundamentals of a company matters a great deal. And following the short-squeeze rallies, prices may easily decline as fast as they rallied.
I’m going to talk about both the recent price action and the most recent quarterly report for the companies I’m covering. That way, you can make a more informed decision whether a meme stock should be on your radar or not.
With that information, here are seven meme stocks to buy now:
- Arcimoto (NASDAQ:FUV)
- Atomera (NASDAQ:ATOM)
- Clovis Oncology (NASDAQ:CLVS)
- LifeMD (NASDAQ:LFMD)
- PubMatic (NASDAQ:PUBM)
- Root (NASDAQ:ROOT)
- Washington Prime Group (NYSE:WPG)
These stocks will likely not be appropriate for all portfolios. Investors should exercise extreme caution with such volatile shares, and those with a low risk tolerance should possibly stay away.
Meme Stocks to Buy: Arcimoto (FUV)
52-week range: $3.14 – $36.80
Our first meme stock, Arcimoto, is a pre-revenue electric vehicle (EV) company, focusing on three-wheeled electric EVs that are marketed as affordable. The product line includes the Fun Utility Vehicle (FUV) for everyday consumer trips; the Deliverator for last-mile delivery and general fleet utility; the Rapid Responder for emergency services and security; the lightweight Roadster; and the Cameo for use by filmmakers.
The company has limited production. Arcimoto announced its Q1 report on May 17. During the quarter, it manufactured 84 vehicles and delivered 60 customer vehicles. These were record numbers for the group.
Total revenue was around $1.4 million, a 126% year-over-year (YOY) increase over the first quarter of 2021. Adjusted net loss was $4.7 million. And adjusted net loss per share was 13 cents in Q1 2021 vs. 15 cents in Q1 2020. Cash and equivalents came at at $46.7 million.
Management cited, “We believe the vast majority of trips … could be handled by small footprint, stable platform, two-seat EVs like those built on the Arcimoto platform … We believe now is the time to partner with the U.S. Department of Energy to bring the full Arcimoto vision to fruition and provide truly affordable ultra-efficient mobility to the world.”
Analysts were not impressed with the low pre-orders during the quarter. Without demand, it will not be possible to scale production and increase revenue. The company expects to increase its marketing efforts in the rest of the year to introduce the products to potential new customers.
So far in the year, FUV stock is up 12%, and hit a record high in February. Since then, the shares have come under short-selling pressure. Finally, the stock’s price-to-sales (P/S) and price-to-book (P/B) ratios stand at 135 and 6.3, respectively.
52-week range: $7.97 – $47.13
From EVs, we move on to the chip space. The Los Gatos, California-based Atomera (ATOM) is a semiconductor materials and technology licensing company. The company has created Mears Silicon Technology (MST), a film that management claims could lead to higher performance. The company’s history goes back 2001 when it was known as Mears Technologies. It’s also a company concerned with limiting its environmental impact.
Atomera released first-quarter financial results on April 28. Revenue increased by 545% YOY to $400,000 versus $62,000 same quarter prior year. Net loss of $3.6 million remained unchanged. Basic and diluted loss share was 16 cents, versus a loss per share of 22 cents same quarter prior year. Cash and equivalents as of March 31 stood at $36.7 million.
CEO Scott Bibaud said, “This quarter we reached another major milestone in our efforts to drive commercial adoption of MST by delivering Atomera’s MST film recipe to our JDA customer, granting them our first manufacturing license to deposit MST film in their fab using their own tools. Working together with our customer, we look forward to proving the benefit of MST in a real-world semiconductor manufacturing environment.”
Despite the bullish comments from management and various licensing agreements, not many analysts have taken a stance on ATM stock. Still, earlier this month Craig Hallum issued a “buy” rating with a price target of $28. The only income received has been engineering services fees, though that could change with an agreement it forged earlier this year.
YTD, ATOM stock has returned more than 59%. In mid-May, the shares were hovering around $13. Now they are at $25. The stock P/S and price-to-book (P/B) ratios are 1,250 and 15.4, respectively.
Meme Stocks to Buy: Clovis Oncology (CLVS)
52-week range: $4.08 – $11.10
Investing in health care companies, especially biotechnology ones, can be both lucrative and risky. The Boulder, Colorado-based Clovis Oncology focuses on anti-cancer agents worldwide, and targets development programs for the treatment of specific subsets of cancer populations. Its primary product is Rubraca.
On May 5, CLVS released first-quarter results. Product revenues amounted to $38.1 million, down 11% YOY. Net loss was $66.3 million, compared to the net loss of $99.3 million in Q1 2020. Net loss per share was 64 cents, versus the loss per share of $1.39 a year ago. Cash and equivalents at the end of Q1 stood at $190.9 million.
On the results, CEO Patrick J. Mahay said, “While continuing headwinds from COVID-19 impacted Rubraca sales this quarter, we believe this effect will lessen over the course of this year. Importantly, since each approved PARP inhibitor faced some impact from COVID-19 in the US market in Q1 2021 compared to Q4 2020, we believe we maintained market share in the US.”
CLVS stock returned 23% since the start of the year. The most recent up move started in late May around $5. Potential investors should keep abreast of product developments at Clovis Oncology. Finally, the P/S ratio stands at 3.3.
52-week range: $1.40 – $33.02
The pandemic has seen a range of words, such as telemedicine, enter our daily lives. LifeMD, a telehealth group, offers direct-to-patient products and services. The company was previously known as Conversion Labs.
Its telemedicine platform enables virtual access to medical treatment from licensed providers. Prescription medications and over-the-counter products are also delivered directly to patients homes.
Life MD announced its first quarter report at the end of April. Total revenue was $18.2 million, a 323% YOY increase over the first quarter of 2020. Adjusted net income was $19.5 million. Adjusted net loss per share was 38 cents in Q1 2021 vs. 22 cents in Q1 2020. Cash and equivalents ended at $13.4 million.
On the results, CFO Marc Benathen stated, “we continue to ramp the business in support of growing revenues and an increasing subscriber base with the goal of working towards profitability. We have … reduced our cash burn on a go forward basis by approximately 30% … This burn will continue to further reduce as we scale our company.”
According to the press release, “for the full year 2021, the company is raising its revenue guidance to $90 million to $100 million from its previous guidance of $85 to $95 million. The current guidance represents revenue growth of 141% to 168% versus prior year.” As the company tries to grow its platform offerings and add more customers, losses are likely to continue for some time.
YTD, the shares are up nearly 120%. In mid-May LFMD stock was around $6. Now it’s around $14. The current P/S ratio is 6.9.
Meme Stocks to Buy: PubMatic (PUBM)
52-week range: $22.42 – $76.96
Redwood City, California-based PubMatic provides supply-side, cloud infrastructure platform for digital advertising that enables real-time advertising transactions. The company was founded in 2006, and today operates 14 offices and eight data centers worldwide.
It had its initial public offering (IPO) in December 2020. As a young, small company, PUBM has to invest heavily for growth. Another ad tech company, Magnite (NASDAQ:MGNI), is a competitor.
PubMatic announced Q1 financial results on May 13. Revenue grew to $43.6 million, up 54% YOY. Net income of $4.9 million meant an increase of 444% YOY. Diluted EPS was 9 cents. Total cash and equivalents were $76.6 million, up 56% YOY.
CEO Rajeev Goel said, “Our omnichannel platform fueled growth across all segments of our customer base and all formats we serve, particularly in video and OTT/CTV. Our execution, combined with the economic re-opening and expected acceleration of digital advertising, gives us confidence to raise our full year outlook for 2021.”
PUBM stock is up 23% YTD and hit a record high in early March. The most recent rally started in early June, when the shares were trading around $28. Now, they are about $34. Forward price-to-earnings (P/E) and P/S ratios stand at 108.7 and 10.3, respectively.
52-week range: $8.19 – $29.48
Insurance technology (insurtech) companies that are aiming to disrupt the insurance industry have been getting increased attention. Root, an emerging name in this space, offers direct-to-consumer personal automobile insurance stateside.
Management relies heavily on telematics, or driving data, to underwrite policies and deal with claims. The company does not want to base decisions on credit scores of drivers. Root had its IPO in October 2020.
The insuretech group announced first quarter results at the beginning of May. Total revenue was $68.6 million. Gross profit was $6 million, an increase of $23 million from the previous year. Diluted loss per share was 40 cents.
CEO Alex Timm said, “Root emerged from Q1 stronger and better positioned to achieve our ambitions of profitably growing our business and continuing to lead the disruption of the traditional insurance industry.”
Management’s focus for the coming quarters it to increase revenue per customer via product expansions, reduce acquisition costs as a percentage of premium, improve customer retention and price premiums more accurately based on individual risk.
YTD, ROOT shares are down about 31%. But in May, they were around $9 and are now a bit under $11. The second half of the year will show whether the up move will continue. P/S and P/B ratios stand at 9.4 and 2.9.
Meme Stocks to Buy: Washington Prime Group
52-week range: $1.69 – $16.55
Our final stock is likely to be the most risky of the meme stocks covered today. On June 14, it was announced that the Columbus, Ohio-based Washington Prime Group filed for Chapter 11 bankruptcy protection. This mall owner is a real estate investment trust (REIT), formed in 2014 as a spin-off from Simon Property Group (NYSE:SPG).
During the pandemic, a number of retail investors were not shy to buy the shares of distressed companies that declared bankruptcy. Examples include Hertz (OTCMKTS:HTZGQ) and JCPenney (which traded as JCP pre-bankruptcy). We should note that bankruptcy proceedings typically leave equity investors with nothing. In other words, it is usually a high risk bet.
But Washington Prime is not at there at this point. Instead, WPG has protection from creditors for a limited period to allow it to reorganize. It remains to be seen how the story will develop.
WPG’s focus is retail properties, which have been affected by the pandemic. Its portfolio primarily consists of community shopping centers and malls stateside, which has meant falling occupancy rates in the past year.
The REIT released first quarter results on May 10. Total revenue was $131.9 million, down 13.5% YOY. Net loss was $55.4 million compared to net income of $3.4 million the same quarter of the prior year. Diluted loss per share was $2.52 versus income of 16 cents per diluted share a year ago. Cash and equivalents stand at $57 million, down 38.4% compared to the previous quarter.
On March 16, WPG entered into forbearance agreements with several of its senior notes holders and lenders. As a result, they got extended by several week. The company intends to continue normal operations and generate sufficient liquidity from restructuring. But management also added that “there can be no assurance that the restructuring will occur or be successful.”
Wall Street has been concerned that Washington Prime might not be able keep up with its interest and debt payments in the coming months. Moreover, it faces a class-action lawsuit for misleading as well as unreasonable business operations and prospects.
WPG stock is down 55% YTD. After hitting a 52-week high of $16.55 in late January, the stock nosedived and saw a 52-week low of $1.69 in early March. Then came the sudden run-up in price over the past month and WPG shares rallied to almost $7. Now, they’re under $3. Coming weeks are likely to bring more volatility to the shares. On a final note, P/S and P/B ratios stand at 0.24 and 0.35, respectively.
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On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.