We’re well into 2022 which means we’ll be discussing stocks to buy this year. In this case, in January. If you’re like me, you associate Reddit stocks with the r/WallStreetBets message board and AMC (NYSE:AMC) and GameStop (NYSE:GME) stocks in particular.
I don’t recommend buying either but I do believe they represent an amazing narrative. It was when r/WallStreetBets fans decided to band together and take on Wall Street short sellers at their own game that this phenomenon began.
It was one of the stranger things to happen in the markets in 2021. But 2021 was a strange year. Investing does look to be forever changed. It doesn’t look like things are reverting to their former status. That means Reddit message boards will play a vital role in share prices this year too.
While the phenomenon has brought us phrases including “diamond hands” and some suspect investing advice, it isn’t all a joke. There are many who simply want to understand the stock market and make wise investment decisions.
It isn’t all about wild speculation by any means. Bearing that in mind, let’s look at the more moderate side of Reddit stocks to consider this month.
- Roblox (NYSE:RBLX)
- Starbucks (NASDAQ:SBUX)
- CrowdStrike Holdings (NASDAQ:CRWD)
- Unity Software (NYSE:U)
- Nvidia (NASDAQ:NVDA)
- Zscaler (NASDAQ:ZS)
- Etsy (NASDAQ:ETSY)
Reddit Stocks: Roblox (RBLX)
On Oct. 28 Facebook rebranded to become Meta Platforms (NASDAQ:FB). That announcement fomented a sea change in opinion regarding the metaverse.
In short, it made it much more real. If Facebook is bold enough to change its name to Meta Platforms the thinking goes, then this metaverse thing is more than just a passing fad.
That of course meant that all stocks related to the metaverse suddenly became much more interesting, Roblox among them.
Roblox is a platform that allows developers to build millions of immersive worlds through the Roblox Studio. Avatars exist within those worlds, interacting in the multitude of ways that humans do in the real world.
Most analysts agree that RBLX stock should appreciate in price moving forward. However, there is something of a disagreement when it comes to judging the company’s performance.
Some analysts look to bookings, while others consider traditional metrics like revenue to be more indicative of performance.
In both cases, the month of November was strong. Bookings were between $208-$211 million, representing a 22%-24% increase year-over-year. Revenues increased by as much as 87% during the same period.
If you look to the analysts covering Starbucks, you’ll get a mixed message on its prospects right now.
About half of them rate it a buy, while the other half have it a hold. That makes sense. Omicron is playing a big part in tampering an economic rebound. Inflation concerns directly affect retail as well, and that could tamp down demand at Starbucks.
Starbucks is undertaking some important changes. In October, Starbucks announced it will increase the wage floor for its employees. U.S. hourly employees will average nearly $17/hr and baristas will make a range of $15-23 beginning this summer.
Yes, that increases operational expenses, generally not a great factor when it comes to stock prices, but analysts also agree that this is the correct course for Starbucks in the long term.
So, buy SBUX now while it’s temporarily down, and capitalize later when strong choices pay dividends.
Remember, Starbucks posted record quarterly revenues of $8.1 billion recently. Sales were strong globally and domestically. Starbucks is down because of broader narratives but remains fundamentally the same exceptionally strong business it ever was.
Reddit Stocks: CrowdStrike Holdings (CRWD)
When a stock gains notoriety for a leadership position it often gets overbought. That looks to be what has happened to cloud cybersecurity firm CrowdStrike Holdings.
It became the hot name in securing devices, especially corporate ones, even in the cloud. Capital rushed in, and prices shot up to levels that seemed unjustified based on sales.
Then the market stepped back, noted that CRWD stock was suddenly overpriced, and capital fled in November. It was a classic example of the market pendulum swinging to extremes. In other words, it’s cheap now because of negative overreaction. So, consider a purchase.
It’s true, tech stocks generally get punished when the Fed raises rates. And that certainly played a factor in CrowdStrike moving down recently. But the firm is a strong operator in an increasingly important sector.
The company recently received its second consecutive #1 ranking for Modern Endpoint Security revenue Market Share.
The firm’s most recent earnings report points to almost universally strong fundamentals. And the company has plenty of growth ahead underpinned by a rapidly growing revenue base.
Unity Software (U)
There are at least three reasons to consider investing in Unity Software right now: Analysts strongly back it, recent earnings were strong, and the firm recently acquired a strong asset.
U stock is a near-unanimous buy. Of the 13 analysts with coverage of the stock, all but one consider it a buy. Their average target price of $181.83 is 56% higher than it currently trades at.
That is partially a result of the firm’s recent strong earnings, which point to a solid business. The company, which provides gaming software to monetize 2D and 3D content, recently posted a record $286 million in quarterly revenues.
The company went public last September. Since then, it has posted average revenue growth of 45%. That should continue. The firm should record in the neighborhood of $1.09 billion in revenues in 2021. That figure is expected to rise to $1.42 billion in 2022.
Further, Unity Software recently acquired Weta Digital. Wet Digital is an Academy Award-winning digital team responsible for scenes and characters in Lord of The Rings and Avatar.
Unity Software acquires Weta Digital’s engineering talent but it will remain separate from Unity.
Reddit Stocks: Nvidia (NVDA)
He likened the powerhouses to “the new oil of the rapidly digitizing global economy.” Arya’s team points to 4+% global GDP growth in 2022 and the outsized role of semiconductors in that growth as a bullish theme.
Arya’s employer anticipates 13% growth in semiconductor industry-wide sales this year compared with last. And NVDA stock is the bank’s first choice investment within the industry.
Analysts predict even sharper growth for Nvidia moving forward. The consensus is that Nvidia will record $26.68 billion in 2022 revenues and $31.77 billion in 2023.
That’s a 19% increase for Nvidia, but BoA is even more bullish and sees Nvidia’s sales increasing by between 25% to 30%.
Average target prices of $342.40 imply significant upside over current prices at $265. 2022 looks like another great year for semiconductor stocks, Nvidia chief among them.
Zscaler is another tech firm that has suffered of late. When the Fed announced it was going to accelerate its schedule for tapering bond purchases it also noted that it would take action on inflation.
That meant easy money policies would tighten, which correlates to a downturn in tech stocks, and ZS stock has been trending down.
The rapid tech selloff has taken it from $365 to around $250 as I write this. Tech has seasons. You can reliably buy tech stocks at a discount around this kind of news, wait for a reversal of sentiment, and profit.
Zscaler reported strong earnings in early December. Revenues grew by 62%, reaching $230.5 million in the quarter. But the wheels of the tech selloff were already in motion.
UBS (NYSE:UBS) analyst Roger Boyd sees an overreaction by the market: “While much of this outsized pressure is due to Zscaler’s higher valuation, we think the market is too pessimistic on growth expectations, sales efficiency and competition.”
Reddit Stocks: Etsy (ETSY)
Invest in Etsy because it fundamentally makes sense.
The handmade products online marketplace showed strong performance during its most recent earnings period.
Quarterly revenues increased 17.9% which was the exact same amount by which gross merchandise sales (GMS) increased. GMS increased by 39.2% while revenues moved upward by 45.4% through the first nine months of 2021.
But that knowledge was released in early November. Now investors are waiting to see how Etsy did during the holiday season.
If the news is good, as it is expected to be, ETSY stock will rise. Given that share prices have dropped markedly throughout December and into January, now is the time to buy.
Some are predicting that Etsy remains overvalued even at current prices. But ecommerce isn’t going anywhere. Etsy dominates the handmade space, and that makes it worthwhile.
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.