Following its debut on the NASDAQ exchange, Robinhood (NASDAQ:HOOD) might just be “the first meta-meme stock.” But that by-itself doesn’t make buying shares in the brokerage app a strong opportunity. As I recently broke it down, there are many reasons why chasing the stock after its IPO isn’t the best move.
Traders who flipped it shortly after its debut may have seen some quick gains. Yet that may not be the case for traders who get in now. Between a rich valuation, concerns it’ll fail to supplant “old school” brokers, and its dependence on retail trading to generate revenue from payment for order flow (PFOF), there’s a lot more that could sink Robinhood shares than send them surging from here.
Instead of taking a gamble on this situation, where the ship may have already sailed, you may want to take a look at some of the other “meme stocks” with room to run in the near-term.
So, which “meme stocks” appear to be better opportunities than Robinhood? All trending on Reddit’s r/WallStreetBets subreddit, here are 7 top meme stocks to buy:
- Corsair Gaming (NASDAQ:CRSR)
- fuboTV (NYSE:FUBO)
- Microvast (NASDAQ:MVST)
- Root (NASDAQ:ROOT)
- Support.com (NASDAQ:SPRT)
- Upstart (NASDAQ:UPST)
- UWM (NYSE:UWMC)
Many of these names may have pulled back considerably since the last “meme stock wave” ended in June. But whether they’ve performed poorly or strongly as of late, each one has factors in its respective corner that could help it surge in a big way in the near-term.
Meme Stocks to Buy: Corsair Gaming (CRSR)
Corsair Gaming may have peaked in price well before “meme stocks” became a thing. And it may suffer valid concerns that pandemic tailwinds that turbo-charged sales growth for this gaming peripherals purveyor are fading. Nevertheless, that hasn’t hurt its appeal among Reddit traders.
Of course, their interest in CRSR stock has more to do with its status as a short-squeeze stock. But catalysts related to the company’s performance may be what sends it soaring once again.
Yes, as seen from its most recent quarterly results and guidance, growth has certainly taken a hit. Its top line results in 2020 surged more than 55%, to $1.7 billion thanks to demand driven by Covid-19 lockdowns. For 2021, outlook suggests sales will rise to between $1.9 billion and $2.1 billion, an increase of just 11.8%-23.5%.
Yet just as with other growth stories that have found a new life as “meme stocks,” growth with this name could reaccelerate in the years ahead. As Corsair CEO Andy Paul put it himself, this remains a play on both long-term secular gaming growth as well as long-term growth of video game streaming.
Reasonably priced at a forward price-to-earnings (P/E) ratio of 15x, consider this one of the “meme stocks” with more than just Reddit hype on its side.
fuboTV (FUBO)
Like other “meme stocks,” a lot of the appeal with FUBO stock is its chance of getting short-squeezed. Short interest runs high (currently 17.5% of float), as bears are betting big that the company’s sports streaming/wagering platform will fail to find success due to high competition from big media, as well as from early-movers in the online sportsbook space such as DraftKings (NASDAQ:DKNG).
Yet as I said back in July, the risk of competition may be overblown with fuboTV. Only time will tell whether it can take on DraftKings and other leading sportsbook operators. But when it comes to streaming competition, things may not be so cutthroat. In fact, instead of trying to crowd it out, Comcast (NASDAQ:CMCSA), parent company of NBCUniversal, owns a piece in it. Other media conglomerates, like Disney (NYSE:DIS) and ViacomCBS (NASDAQ:VIAC), own stakes as well.
As these partnerships enable it to provide popular sports networks on its platform, the company may have plenty of room to expand its subscriber base. From its most recent quarterly results, it’s clear that is what’s playing out right now. In time, the company may be able to convert these streaming subscribers into regular customers for its sportsbook operations, which are in the process of coming online.
Big time success and profitability may be years ahead. But getting into FUBO stock today, while it remains beaten down at prices more than 56% below its all-time high, could be a winning play in hindsight.
Microvast (MVST)
Retail traders aren’t as keen on SPAC (special purpose acquisition company) stocks as they were at the start of 2021. Instead of diving into anything SPAC-related, they’ve become more choosy on which names to place their bets on. Microvast has been one of those choices, as indicated from the heavy amounts of chatter about it on r/WSB earlier in August.
This former blank-check company completed its reverse merger late last month. Ahead of the deal close, MVST stock fell below its $10 per share initial offering price. But as InvestorPlace’s Brenden Rearick reported August 6, retail traders have decided to bet against the bearish so-called “smart money” by taking the long side of the trade.
At first glance, this may look like regular Reddit trader antics. That is, bidding up a stock on hype and momentum, rather than fundamentals. But as I discussed last month, the details look promising when it comes to Microvast. The EV battery maker, focused on the commercial rather than passenger vehicle market, is making all the right moves.
These smart moves now, which include partnering with commercial vehicle heavyweights like Oshkosh (NYSE:OSK) could pay off big time down the road. It’s pulling back from its recent Reddit pop, but back at around $9 per share, consider it one of the top “meme stocks” to buy.
Root (ROOT)
Down more than 80% since its debut last fall, why would you want to follow the lead of Reddit traders, and jump into ROOT stock? At first glance, shares in this insurance tech company, which like Lemonade (NASDAQ:LMND) is using artificial intelligence (AI) to beat old school insurers at their own game, may not look so appealing.
Like its rival, Root is hemorrhaging cash. Looking to build up its policyholder base, it’s been willing to lose money now, in hopes of hitting profitability later. The jury’s still out whether this strategy will pay off. As one Seeking Alpha commentator recently discussed, the situation looks set to get worse before it gets better.
Again, you may be asking, would I consider this a great meme stock to buy? These weak prospects are more than accounted-for in the ROOT stock price. At around $5.50 per share, the stock is priced as if the “worst case scenario” is going to be one that plays out. The silver lining? Recent developments could indicate its future isn’t as bleak as recent results may suggest.
The company’s capital infusion and partnership deal with Carvana (NYSE:CVNA) could be something that turns around its fortunes. Given its high short-interest, any bit of other positive news (even if small potatoes) could also be enough to send it surging once again. It’s a “tread carefully” situation for sure. But if you’re looking for a high-risk/high-possible-return “meme stock,” this may be the ticket.
Support.com (SPRT)
Looking for a “meme stock” with crypto exposure? SPRT stock may be the one to buy. The company, right now in the customer support business, will soon become a crypto mining play, once it completes its merger with privately-held Greenidge Generation. Shortly after this deal was announced last spring, I dived into why this may be a much better mining play than the rest of its publicly-traded competition.
First, the merger, which will give Greenidge investors a majority stake, has been priced in a way that’s favorable to those owning Support.com stock right now. Second, with lower mining energy costs (since it owns its own power plant), profitability next year could be substantial.
Projections from the company’s merger presentation call for $145 million in revenue, and $109 million in EBITDA next year, assuming Bitcoin (CCC:BTC-USD) prices climb back to $49,000. Back in June, after the crypto meltdown, that may have sounded like a tall order. But with BTC’s rebound back to around $45,500 (after briefly falling below $30,000), a move back to $49,000, or even higher, may be more than attainable.
Admittedly, SPRT stock has seen a considerable run-up due to the BTC price rebound. Even so, with its sky-high short interest (62.5% of float), popularity among traders, and the comeback potential of its soon-to-be underlying business? Consider this one of the “meme stocks” with the most potential.
Upstart (UPST)
Up nearly 76% in a month, why do I like Upstart stock? Its off the charts run-up may make it look too chancy to dive into right now. But looking at its details, there’s merit to buying in now. Even as it appears to be topping out at around $201 per share. The AI-based lending platform has really started to see its operations take off this year.
Revenue for the quarter ending June 30 was up more than 1000% from the prior year’s quarter. Not only that, unlike some of the other fast-growing, but early stage companies, UPST stock is already posting positive earnings per share (EPS). Last quarter, GAAP EPS came in at 39 cents. Besides delivering blockbuster results, the company upped its 2021 full year revenue guidance, from $600 million, to $700 million.
One may think its current valuation more than reflects its full potential. It currently trades for 161.8x estimated earnings, and has a $15.8 billion market capitalization. Yet as one Motley Fool commentator has argued, as it moves from not just personal and auto loans, but consumer loans as well, Upstart stock may have room to run another 10x over the next decade.
Shares could hang tight, or pull back a bit, as investors absorb its most recent development (the issuance of $575 million in convertible senior notes). With the hype taking a breather, now may be the time to lock in a long-term position.
UWM (UWMC)
After months of minimal chatter, Reddit buzz is on the rise again for UWMC stock. The residential mortgage wholesaler released mixed quarterly results on August 16. Yet don’t let this, and overall housing market concerns, discourage you from buying it.
Why? Investors may have been disappointed by its earnings miss for the preceding quarter. But trading at a single-digit forward P/E ratio, the market has already taken into consideration the uncertainty of future results. With regards to its downside risk if the once “too hot to touch” housing market is starting to cool off.
As our Ian Bezek discussed back in June, focusing more on new purchase mortgages rather than refinancing mortgages, UWM may be better positioned than its well-known rival, Rocket Companies (NYSE:RKT). You can argue that the stock’s low valuation also takes into account the risk that the housing market today is in another bubble, at risk of a burst.
If it ends up being a soft landing for the housing market in the year ahead? Some of the pressure atop UWMC stock today could ease. This may help give the stock a chance to rebound. Trading for around $7.25 per share today, an easing of uncertainty could send it back to $10 per share and above.
On the date of publication, Thomas Niel held a long position in Bitcoin. He 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.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
