It’s fair to say that meme stocks don’t have the greatest reputation. There are a few reasons for that. First, two of the most important stocks within that grouping — GameStop (NYSE:GME) and AMC (NYSE:AMC) — are of dubious merit. They catalyzed the movement, and they are likely the first names that come to mind when the subject arises. But most would agree that their chances of long-term success are slim.
Second, the advice that underpins meme stocks is often as much about getting a laugh as it is about providing good advice. That can make it difficult to have much faith in meme stocks overall. However, investors will find that some of the logic behind the class of stocks is very sound.
Rather than simply chasing a short squeeze and attempting to convince ever more memesters of that possibility, meme stock enthusiasts make fundamentally sound recommendations too. There are reasonable, logically appealing stock recommendations that have recently appeared on the meme stock tracker list.
The following meme stocks are names that pop up on all kinds of stock recommendation lists. Don’t let the “meme” portion of it alone turn you off. These stocks within that list are logical, buy-the-dip recommendations for investors of all risk profiles:
- United States Steel (NYSE:X)
- Copa Holdings (NYSE:CPA)
- Roku (NASDAQ:ROKU)
- DTE Energy (NYSE:DTE)
- Caterpillar (NYSE:CAT)
- Jazz Pharmaceuticals (NASDAQ:JAZZ)
- Lockheed Martin (NYSE:LMT)
Best Meme Stocks: United States Steel (X)
One of the things meme stock followers do is something that all investors do: Seek overall catalysts that bode well for entire sectors. So it’s no surprise then that United States Steel shows up among their lists. Steel has a significant catalyst in the infrastructure bill.
Steel industry groups are applauding the $1 trillion deal which will broadly stimulate demand for domestic steel.
Kevin Dempsey, CEO of the American Iron and Steel Association noted as much. “Funding roads and bridges, ports and waterways, water infrastructure, the electric grid and investing in electric vehicle systems, all will require a lot of steel — and our industry is ready to provide that steel.”
The news has sent steel stocks moving up and down throughout the year. That has resulted in X stock seesawing in kind. It’s down a few dollars over the past month, trading near $23 currently. But consensus target prices place it in the $32.50 price range.
It probably won’t boom upward on earnings in 2022. United States Steel is expected to have made roughly $20.4 billion in 2021, dropping slightly to $19.5 billion in 2022. However, high estimates range much higher. At $24.11 billion that estimate suggests steep price increases for X stock.
Copa Holdings (CPA)
Copa Holdings is an airline serving multiple destinations between the U.S. and Latin America.
As you are well aware, airlines have been in a prolonged slump. Investors of all stripes are interested in seizing upon the overall rebound. And memesters are interested in CPA stock in particular.
Let’s start with some broad numbers that indicate CPA share prices are set to rise. First of all, shares trade at $77 currently but carry a target price of $102.25 with an “overweight” rating. And like pretty much all airlines, Copa is poised to see increased revenues in 2022. Expectations are that the firm will record $1.26 billion in 2021 revenue. That should rise to approximately $2.22 billion in 2022.
The firm recently released information regarding flight capacity for the month of November. There is reason for optimism from those figures. In particular, in regard to Copa’s load factor. Load factor measures the percentage of seating capacity on a plane that actually gets utilized. At 84.5% in November, it was very close to the 85.5% load factor the company realized in November of 2019.
Best Meme Stocks: Roku (ROKU)
Roku is a smart TV device company that has seen quite a bit of volatility in 2021. Roku boxes themselves allow users to access streaming services. It has seen very high highs and looks to be currently coming out of a very low low.
Roku is interesting in that it is a stay-at-home play. It therefore tended to move with vaccine news throughout 2021. It suffered a downturn — a big one — beginning in July. That took it from prices approaching $500 down to prices in the $200s.
That strongly indicates a current opportunity. Target prices are much higher at $377.96. Whether they get there over the next year is anyone’s guess. There are rumblings that Roku became overheated and therefore didn’t deserve to rise as high as it did in 2021. However, growth is in Roku’s future.
Analyst expectations are that Roku will see revenues rise by approximately $1 billion in 2022, reaching $3.78 billion. For that alone, investors ought to at least consider buying it and stashing it for that period.
It’ll undoubtedly move in 2022, but indications are that simply riding those highs and lows will pay off.
DTE Energy (DTE)
DTE energy reinforces my earlier assertion that meme stock recommendations aren’t simply short squeeze plays. In fact, meme stock recommendations can be downright conservative. DTE stock is a case in point.
DTE Energy is a utility firm located in Detroit. There is still a bit of room for DTE stock to continue to appreciate during its rebound out of a slump. Target prices sit above $126 and it trades near $117 now after slumping since early September. Long story short, there’s room for price appreciation. Combine that with its dividend and you have a strong case for a conservative utilities play in DTE stock.
That dividend currently pays 88.5 cents quarterly (an annual yield of 3.1%) and should continue to rise. It was reduced from 92.3 cents in June. At that time it was cut down to 82.5 cents. It has already been raised 6 cents since then and hadn’t been reduced before that since its 1985 inception.
My guess is that management is eager to quickly raise that dividend back to its prior levels rather than risk a capital flight. That means there’s an excellent opportunity to get in now and capitalize on quickly increasing dividends. Dividend investors know that such an opportunity doesn’t come around often.
Best Meme Stocks: Caterpillar (CAT)
I’m going to borrow a few of the words of my colleague Dana Blankenhorn on the opportunity to capitalize on Caterpillar’s slump:
“The pandemic has stalled the boom in infrastructure spending that was expected to follow the pandemic. The Congressional delay in getting that spending approved hasn’t helped. Neither have Caterpillar’s own supply chain problems.
“But the boom is coming. While you wait for it you can own one of the great value stocks of our time.”
He goes on to outline further reasons Caterpillar fell: sagging growth in China, rising material prices and a simply overheated CAT stock.
There’s plenty to like about CAT from a simple expectations perspective. It probably won’t quickly retrace $240 levels soon, but it should continue to move beyond $200 quickly. It is a conservative play that bears a dividend just as DTE stock above.
Caterpillar’s dividend was increased back in July to $1.11 with a 2.2% yield. It hasn’t been reduced in years, and it’s fair to assume that it is safe and that share price appreciation remains a reasonable expectation.
Jazz Pharmaceuticals (JAZZ)
Dublin, Ireland based firm Jazz Pharmaceuticals offers therapeutics for sleep disorders, hematology, oncology and psychiatry primarily.
JAZZ stock entered a prolonged slump in early August from which it hasn’t reemerged. However, there’s reason to believe it soon could. When the firm released earnings on Nov. 9, there was reason to be positive: Revenues increased 39% to $838.1 million in Q3 on a year-over-year basis.
Further, 52% of net sales were attributable to recently launched or acquired products. That’s fairly indicative of continued future growth. However, Jazz Pharmaceuticals has a leverage issue, which it is actively working to lower.
The bigger story though, is losses. The firm went from nearly $150 million net income through the first nine months of 2020, to a $52.83 million loss in the same period in 2021. Top line growth is expected for 2022 along with EPS normalization, meaning JAZZ should rebound moving forward.
Best Meme Stocks: Lockheed Martin (LMT)
Lockheed Martin share prices fell off a cliff on Oct. 25. The defense contractor reported weaker than expected quarterly results and also reduced its guidance. Q3 revenues only reached $16 billion, lower than the $16.5 billion a year earlier and $17.1 billion Wall Street anticipated.
That led the firm to reduce full-year 2021 revenue guidance to $67 billion. The firm’s 2022 outlook was reduced to $66 billion while Wall Street had earlier anticipated $70 billion next year. In short, it spelled big trouble. LMT stock dropped from $376 to $330 immediately.
That isn’t exactly what investors have come to expect from the staid, conservative, defense play. But investors should be aware that there is positive news coming out of Lockheed Martin.
Finland announced on Dec. 9 that it is purchasing 64 F-35A fighter jets from Lockheed Martin valued at $9.5 billion. That’s good news following the earnings disappointment, because it proves Lockheed Martin is every bit as competitive as it has always been. The firm outcompeted Boeing (NYSE:BA), Dassault (OTCMKTS:DUAVF) and Saab (OTCMKTS:SAABY) to secure the contract.
On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
