“Meme stocks to buy” has become one of the hottest topics on Wall Street. Since January, retail investors have taken advantage of their collective power to help generate breathtaking gains for underdogs like Gamestop (NYSE:GME) and AMC (NYSE:AMC). Now, those who’ve had the foresight and courage to invest in these meme stocks at the right time have enjoyed healthy returns. Year-to-date (YTD), GME and AMC are currently up 946% and over 2300%, respectively.
Meme stocks move mainly as a result of social media platforms like Reddit. Once Wall Street analysts turn bearish on certain stocks, groups like Reddit’s r/WallStreetBets and folks on platforms like TikTok and Twitter (NYSE:TWTR) join in the discussion. The resulting chatter fuels enormous rallies in these heavily shorted stocks as retail traders rush in to buy shares. And as we’ve come to see, when enough retail traders put their minds and money into these names — even the ones with poor fundamentals and dwindling returns — the momentum can become overwhelming.
That said, what matters the most for any investment is having solid fundamentals in the long run. Therefore, for this article, I’ll discuss the recent price action and the most recent quarterly reports for seven meme stocks. Readers can then make a more rational decision as to whether these names should be on their radar or not.
So, with that in mind, here are seven picks that have the potential to deliver incredible performances. Just remember that these names are extremely volatile, especially intraday. They may not be appropriate for all portfolios.
- Clover Health (NASDAQ:CLOV)
- Corsair Gaming (NASDAQ:CRSR)
- FOMO ETF (BATS:FOMO)
- LifeMD (NASDAQ:LFMD)
- Nokia (NYSE:NOK)
- Ocugen (NASDAQ:OCGN)
- VanEck Vectors Social Sentiment ETF (NYSEARCA:BUZZ)
Meme Stocks to Buy: Clover Health (CLOV)
52-week range: $6.31 – $28.85
First up on this list of meme stocks, Clover Health is a healthcare technology name. Its platform collects and analyzes health and behavioral data with the aim of improving medical outcomes and lowering costs for patients. The company provides preferred provider organization and health maintenance organization health plans for Medicare-eligible consumers through its software.
Clover Health released first-quarter results back in mid-May. Total revenue was $200.3 million, a 21% year-over-year (YOY) increase from $165.5 million a year ago. Furthermore, its net loss increased from $28.2 million in the prior-year quarter to $48.4 million, mainly due to increases in Covid-19 related expenses. Finally, cash and equivalents ended the period at $720 million. On the results, CFO Joe Wagner noted the following:
“In the first quarter we delivered a record-setting $200 million in revenue, which was quickly followed by the launch of our Direct Contracting Entity. Notably, the Clover Assistant continues to power improved financial outcomes.”
Now, Clover anticipates revenue will reach between $810 million and $830 million for full-year 2021. However, analysts point out that the business model has a sustainability issue. The company pays out much of its revenue in medical care expenses to retain customers, i.e. mostly physicians.
CLOV stock hit an all-time-high (ATH) of $28.85 on Jun. 9 during the peak of its meme-stock frenzy. The shares currently hover at $10.45, down nearly 38% YTD.
Corsair Gaming (CRSR)
52-week range: $14.09 – $51.37
Corsair Gaming provides gear for gamers and content creators. This company’s product portfolio includes headsets, controllers, mice, keyboards and other gadgets that are used by livestreaming gamers and content creators on platforms like YouTube and Twitch (owned by Alphabet (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) respectively).
This company reported Q1 results back in early May. Total revenue grew about 72% YOY to $529.4 million. Additionally, adjusted net income more than quadrupled to $58.2 million, or 58 cents per diluted share. Finally, cash and equivalents ended the quarter at $125.6 million. On the results, CEO Andy Paul remarked:
“We reduced debt by an additional $28 million with outstanding principal now at $299 million and net debt at $177.3 million. We did this while growing quickly and leaving sufficient resources to help us grow further.”
Many analysts believe Corsair Gaming could be well-positioned to take advantage of the fast growth in e-sports and livestreaming. Last year, one market report predicted that 2.7 billion gamers worldwide would help the global games market generate revenues of over $159 billion. Andy Paul also pointed out that ” in Q1, we [Corsair] were the No. 1 market share position in every gaming components category.”
Aside from high growth potential, Corsair Gaming also boasts solid fundamentals that make it more than just a meme stock. Currently, CRSR stock hovers between $32 and $33, down 11% YTD. Investors might also want to know that the shares trade at a forward price-earnings (P/E) ratio of 17.7, far cheaper than rival Logitech’s (NASDAQ:LOGI) 28.15 multiple.
Meme Stocks to Buy: FOMO ETF (FOMO)
52-week range: $25.02 – $26.79
Expense ratio: 0.90% per year
The next choice on this list of meme stocks is actually an exchange-traded fund (ETF) — the FOMO ETF, which was named after the “fear of missing out” phenomenon. FOMO provides exposure to current or emerging trends through investing in equities as well as a wide range of ETFs in different assets classes.
This actively managed fund first started trading on May 25 and currently has 97 holdings. According to Matthew Tuttle, CEO of Tuttle Capital Management and adviser for the ETF, “As technology evolves, investors will continue to look for exposure to new areas of the market. FOMO is positioned to dynamically shift exposure to current market trends.”
Right now, the leading ten holdings comprise a little over 11% of FOMO’s net assets, which stand around $5.9 million. In other words, this is a young and small fund. Some of the leading stocks in the ETF currently include Nio (NYSE:NIO), Riot Blockhain (NASDAQ:RIOT) and Moderna (NASDAQ:MRNA).
So far, FOMO has lost just over 1% in the past month. Although it is not an ETF that solely focuses on meme stocks, investing in trends is a hot topic on Wall Street. However, such an investment strategy can also become a high-risk play. As such, risk-tolerant investors may consider waiting for a pullback in the FOMO price. It currently trades slightly below its record high of $26.79.
52-week range: $1.95 – $33.02
Next up on this list of meme stocks is LifeMD, a direct-to-patient telehealth company. Its telemedicine platform helps patients access licensed providers for diagnoses, virtual care and prescription medications. In recent weeks, the company has also launched NavaMD, its personalized tele-dermatology brand.
Like other names, this company announced first-quarter results in mid-May. For starters, revenue increased 323% YOY to $18.2 million. The Q1 net loss also stood at $11.6 million and the net loss per share of 47 cents was better than expected. Lastly, cash and equivalents ended the quarter at $13.4 million. On the results, CFO Marc Benathen cited:
“We continue to ramp the business in support of growing revenues and an increasing subscriber base with the goal of working towards profitability […] Based on the strong results of Q1 and continued momentum resulting from our strong recurring subscription revenue model, we are now increasing our Full Year 2021 Revenue Guidance to $90 to $100 million.”
This meme stock hit an ATH of just over $33 in mid-February. It has since lost around two-thirds of its value. LFMD stock currently hovers just below $11. However, that’s still up 64% YTD. Further, bullish analysts have recently rated the stock a buy with a $40 high price target. That suggests a new up leg could start in the shares in the second half of 2021.
Meme Stocks to Buy: Nokia (NOK)
52-week range: $3.21 – $9.79
Nokia is the next pick of the meme stocks on this list and is a leading vendor in the telecom equipment industry. This company’s network business derives revenue from selling wireless and fixed-line hardware, software and services. In addition, Nokia’s technology segment licenses its patents to manufacturers, earning royalties from Nokia-branded cellphones.
Nokia released first-quarter financial results in early May. Total revenue of 5.08 billion euros ($6 billion) was up 9% YOY in constant-currency terms. Additionally, net earnings came in at 263 million euros ($310.9 million) compared to a net loss of 115 million euros ($135.9 million) in the prior-year quarter. Finally, cash and equivalents ended the quarter at 3.7 billion euros ($4.37 billion). CEO Pekka Lundmark remarked, “Today’s results demonstrate that we are on track to deliver on our three-phased plan to achieve sustainable, profitable growth and technology leadership.”
Lundmark also highlighted that 2021 would be a year of transition as Nokia expands its 5G business and upgrades its cloud and network services. The company expects the 5G market to become its main growth engine. It has already achieved over 160 commercial 5G deals as well as more live 5G network deployments.
However, Nokia has also fallen behind Huawei and Ericsson (NASDAQ:ERIC) in the 5G race, losing significant market share in China amidst the trade war. The company now aims to compensate for this by attracting customers away from Huawei and ZTE in non-Chinese markets.
Today, NOK stock hovers around $5.40 territory, up 38% YTD. While the shares might look cheap compared to peers, the stock could continue to trade at a discount due to short-term headwinds. After all, NOK faces tough competition in the 5G market. Plus, the global chip shortage may impact its network equipment sales throughout the rest of 2021. Currently, its forward P/E and P/S ratios stand at 18.24 and 1.21, respectively.
52-week range: $0.18 – $18.77
Ocugen, the next pick of the meme stocks, is a biopharmaceutical group working mainly on therapies to treat rare eye diseases. It is maybe better known, however, for its efforts to take Bharat Biotech’s Covaxin Covid-19 vaccine to the U.S. market.
Like others on this list, this company also recently released Q1 metrics in May. For the quarter, Ocugen’s net loss was $7.1 million, compared to a loss of $3.9 million in the prior-year quarter. The company reported 4 cents of net loss per share. Lastly, cash and equivalents totaled $44.9 million as of Mar. 31. Following the results, CEO Dr. Shankar Musunuri sounded optimistic about the “interim analysis results of Bharat Biotech’s Phase 3 clinical trial in India as well as positive data from in-vitro studies regarding COVAXIN’s ability to neutralize emerging variants.”
OCGN stock first surged in December 2020, when Ocugen initially announced a partnership with Bharat to co-commercialize Covaxin in the States. As a result, OCGN gained investor attention in the early weeks of the year and hit a record high of $18.77 in February. Today, the stock hovers between $7 and $8, up 312% YTD.
However, Ocugen is no longer pursuing “Emergency Use Authorization” for Covaxin. Disappointing news for investors came back in early June, when the U.S. Food and Drug Administration (FDA) advised the company to file for traditional approval — something that could take up to a year to obtain. Now, even if Covaxin wins approval, the vaccine may no longer be needed by the time it’s available to the public.
So, with nothing else in the pipeline, OCGN stock is a high-risk biotech play. The company generated no revenue in the first three months of 2021. That may give investors enough reason to avoid the stock. Aside from the meme-stock frenzy, there seems to be no other reason behind investing in this healthcare name.
Meme Stocks to Buy: VanEck Vectors Social Sentiment ETF (BUZZ)
52-week range: $21.93 – $26.92
Expense ratio: 0.75% per year
Our final choice of the meme stocks for today is another ETF, namely the VanEck Vectors Social Sentiment ETF. This fund provides exposure to some 75 businesses whose names are active in online news and on social media platforms. Moreover, this monthly rebalanced fund tracks the BUZZ NextGen AI US Sentiment Leaders Index.
BUZZ stock started trading back in early March and the top ten holdings comprise around 31% of total net assets, which currently stand at $248.9 million. That top ten includes Gamestop, Palantir (NYSE:PLTR), Novavax (NASDAQ:NVAX), Draftkings (NASDAQ:DKNG), Peloton (NASDAQ:PTON) and more. As far as sector allocations are concerned, information technology (IT) leads with 24.7%, followed by consumer discretionary (23.3%), communication services (20.5%), healthcare (9.3%), and industrials (8%).
Finally, this ETF recently hit an ATH of $26.92 on Jun. 29. Now, it’s up more than 7% in the past three months. Interested investors should keep BUZZ stock on their radar screen.
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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 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.