With many concerns looming over the market, a full-on downturn may be unavoidable. Of course, that’s bad news for the markets in general. But it’s worse news for meme stocks. Why? If we see a correction or selloff, the names most popular with traders on platforms like Reddit could see much larger declines than others.
For now, that may be a sign to take profits if you hold any meme stocks, or to steer clear if you hold no positions. But once this potential downturn plays out? There are a few meme plays that are actually promising buys for investors on the dip. Right now, they still trade at rich valuations, but they could fall to more reasonable prices.
What do I mean by “promising” here? Well, I’m certainly not talking about AMC (NYSE:AMC) or GameStop (NYSE:GME), both of which could tumble toward pre-meme levels (and stay there) once the hope and hype fades. Instead, I’m referring to plays that have more in their corner than “diamond hands.” Some of these picks are growth stories still in their early stages. Others are more established players that have catalysts which could potentially send them soaring again down the road. After the dust settles, that is.
Which meme stocks should you keep an eye on if a possible market maelstrom hits? These seven stocks could become screaming buys once they’re selling for the right price:
- AST SpaceMobile (NASDAQ:ASTS)
- BlackBerry (NYSE:BB)
- Greenidge Generation (NASDAQ:GREE)
- Microvast (NASDAQ:MVST)
- Palantir (NYSE:PLTR)
- Tilray (NASDAQ:TLRY)
- Upstart (NASDAQ:UPST)
Meme Stocks to Buy: AST SpaceMobile (ASTS)
On the surface, ASTS stock seems like a very risky play. However, the upside potential could be massive here if the company succeeds in building out its space-based cellular network. Projections call it to one day generate as much as $16.5 billion in annual sales by 2030. Not bad, considering that at today’s prices (between $11 and $12), its market capitalization stands at $607 million.
If this company lives up to projections, it will be worth many times what it trades for today — at the very least. However, if AST SpaceMobile fails to deliver, the shares will likely fall to zero. Admittedly, it’s hard to handicap the company’s true odds of hitting big success. But comparing potential three- or four-digit percentage gains against a total loss, the risk-return here is probably in your favor given the present price.
That said, waiting for meme stocks to lose more steam could be an even better way to approach this space play. Trading on its future potential rather than its current results, shares could make a trip back to their low of $6.96, or even lower.
It’s going to take time for ASTS stock to lift off, if it can even do so. Still, the company has potential to scale into a massive enterprise if the stars align. Buying it on weakness could be a shrewd move.
BlackBerry has already given up the bulk of its 2021 gains. Trading for as high as $28.77 during the first wave of the trend, BB stock now changes hands at around $10 per share.
That’s still up from where it was when meme stocks first took off. However, a continued move lower for stocks overall will likely push BB back to the sub-$5 prices it saw in 2020. So, if the meme trend fully goes away in a potential downturn, what’s the appeal of owning this pick?
You may still think of BlackBerry as the mobile device maker that failed to keep up with the changing smartphone market. But that’s the past. Today, it’s a cybersecurity and IoT (Internet of Things) play. Now, if the company manages to scale up both its Spark security platform and QNX IoT platform (which should benefit from autonomous driving), it may have a path back to the moon. And that’s without having to employ any help from Reddit.
It may take time for this turnaround to finally play out. But between now and then, BB stock could fall to a much lower price, enabling investors to buy it ahead of a potentially epic comeback.
Meme Stocks to Buy: Greenidge Generation (GREE)
Recently, the Support.com-Greenidge merger (and the short-squeeze frenzy that happened in the lead-up to the deal) seriously burned meme traders who took a position in this customer support turned Bitcoin (CCC:BTC-USD) mining play back in August.
As you likely know, shares in SPRT stock — the predecessor to GREE stock — went from $8 to nearly $60 per share as speculators tried to turn the heavily shorted name into the next AMC. Unfortunately, though, it didn’t turn out that way.
Per the terms of the merger deal, each share of SPRT converted into 0.115 shares in the new entity once the transaction had been completed. That meant an immediate big loss for existing SPRT shareholders. Given the exchange rate, investors who held stock through the merger have seen their shares plummet from a split-adjusted $102.61 per share to $43.40 per share on GREE’s first day of trading. And the losses have continued to pile up, with the recent crypto selloff putting more pressure onto shares. Plus, now if meme traders with massive paper losses decide to move on, the stock could take another dive.
Nevertheless, although the stock is a “stay away” situation today, you may want to give this pick of the meme stocks a look once the storms have passed. Still one of the better crypto mining plays out there, GREE could be a winner at the right price. Of course, that’s assuming increased regulation doesn’t push BTC lower and keep it there.
Former special purpose acquisition company (SPAC) stock Microvast has certainly seen better days. Earlier this year, while its merger was still pending, shares hit prices topping $25. This was thanks in part to the excitement surrounding electric vehicle (EV) plays (and EV battery plays like this one) once President Joe Biden took office.
Flash forward to now and Biden’s EV policy plans — many of which are included in the infrastructure bill — are still being debated. Because of that, investors have moved out of “green wave” plays in a big way, realizing a full entry into EVs is years away. Plus, a further selloff in speculative growth stocks caused by Federal Reserve tapering may mean another round of declines is imminent.
But if MVST stock gets pushed back into the single digits? This pick of the meme stocks may actually be a great long-term play. Last month, I made a case for why it’s one of the SPAC stocks with the biggest potential. Focusing on commercial vehicles while most rivals fight over the passenger market, Microvast may face fewer competitive challenges. Plus, it has already partnered up with industry leaders like Oshkosh (NYSE:OSK).
This could give the company an edge, as commercial vehicles transition from gas to battery power. So, with the potential to become a multi-billion dollar business by the start of the next decade, buying MVST after another big pullback could become a very profitable move.
Meme Stocks to Buy: Palantir (PLTR)
The trend in meme stocks has played a big role in making Palantir what I’ve called “a wonderful company at an inflated price.”
This name has a strong underlying business. Palantir’s growth is great and it has a deep economic moat, thanks to the relationships it has built with the federal government through multiple administrations. The commercial business is gaining speed as well, which could give Palantir further room to grow sales. But these advantages may not be enough to keep this data-focused company steady, if what’s brewing right now turns volatile short-term.
For example, Federal Reserve tightening could push this richly priced stock — which trades for a forward price-earnings (P/E) ratio of 177 times — to a much lower valuation. PLTR stock could take a 50%-plus dive and still trade at a premium forward multiple. However, if my bearish prediction plays out?
If PLTR moves down from around $28 today toward $10 to $15 per share, it may make sense for investors to lock down a position. Sure, the stock will still be pricey at those levels. But if it continues to grow at a 30%-plus clip, this pick probably won’t have a tough time rebounding once the potential downturn wraps up.
Sure, you could say Tilray’s brief time as one of the meme stocks back in February was a “flash in the pan” situation. Pushed from around $25 to as high as $67 thanks to a short squeeze related to its Aphria merger, this Canada-based cannabis company has since given up its gains. However, there are still catalysts in play that could send TLRY stock to substantially higher levels in the years ahead.
For example, this name has exposure to the potential legalization of marijuana in the United States. Investors may be skeptical of federal legalization happening anytime soon. But CEO Irwin Simon believes the move is not so far away.
If pot becomes fully legal in the States, the news alone will give TLRY stock a big boost. And, even if legalization remains on the back burner, other catalysts could help propel this marijuana stock higher; as InvestorPlace contributor David Moadel recently pointed out, the cannabis company is pursuing growth in Canada and Europe as well. Success outside of the U.S. could prove to be enough to move the needle.
There is one risk to watch out for, however. Shareholders recently gave Tilray the go-ahead to increase its authorized share count. This means dilution in the pursuit of revenue growth, either through secondary offerings or mergers and acquisitions. However, dilution fears and overall market volatility could also send TLRY lower, making for a great vehicle to gain exposure to the cannabis legalization trend.
Meme Stocks to Buy: Upstart (UPST)
Unlike other meme stocks, it’s only been in recent weeks that UPST stock has really taken off. Since Aug. 2, the fintech play has skyrocketed from about $133 per share to around $329 per share today.
With the investing public more aware of Upstart’s artificial intelligence (AI) potential to revolutionize automotive and consumer lending, it’s no surprise shares have moved up so quickly. However, though its future appears bright, UPST is still another richly priced stock (with a forward P/E of 241). It could experience declines if market conditions change and growth plays see their forward multiples compress.
That said, taking advantage of any weakness could pay off in the long term. As one Seeking Alpha commentator recently noted, Upstart’s high rate of projected growth over the next year may make it less pricey than it looks right now.
So, if it pulls back from where it trades today? Upstart would be even more of a bargain. Once its fundamentals become the main driver, UPST stock could become a long-term winner.
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On the date of publication, Thomas Niel held a long position in Bitcoin. He did not have (either directly or indirectly) any positions in any other 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, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.