Figuring out which meme stocks have staying power means learning to distinguish the worthy from the unworthy.
Just take a look at the first page of any meme stock tracker. There you’ll find names including GameStop (NYSE:GME) and AMC (NYSE:AMC). In my estimation, neither of those two stocks will see a renaissance. Their best days are behind them.
At the same time, that list also includes very strong stocks, businesses with strong fundamentals. They don’t trade on a cult following, with enthusiasts working to drive the stock skyward.
Rather, they are steady businesses that investors like Warren Buffett could get behind. In fact, some of them are held by Buffett’s Berkshire Hathaway (NYSE:BRK.B).
The memesters are slowly coming around and realizing that tried and tested methods of investing in stocks also apply to them. That means many of the stocks on this list wouldn’t traditionally be considered meme stocks, but there’s growing support from the traditional meme stock community that makes them worth a look.
That makes the list below a strong bet to outsurvive all the most famous meme fodder moving forward.
- Disney (NYSE:DIS)
- Meta Platforms (NASDAQ:FB)
- Snap (NYSE:SNAP)
- AMD (NASDAQ:AMD)
- Nvidia (NASDAQ:NVDA)
- Pepsi (NYSE:PEP)
- Caterpillar (NYSE:CAT)
Meme Stocks to Buy: Disney (DIS)
Disney’s Q1 earnings report last week sent the stock higher and may keep driving it.
Revenues reached $21.82 billion for the quarter, up more than 34% YoY from $16.25 billion in Q1 ‘21.
That rise in revenue resulted in net income reaching $1.152 billion. Net income was barely positive a year earlier, reaching only $18 million.
Disney was kept afloat during the pandemic by its Disney+ streaming service. The pandemic served as a catalyst, making DIS stock a popular play. New subscriber numbers dwindled in the company’s Q4 ‘21 earnings. Those disappointing subscriber numbers caused DIS stock to turn downward quickly. Wall Street did not like that Disney+ was not meeting expectations while businesses other arms including parks continued to flag.
The good news is that both areas are doing better. Disney added 11.7 million Disney+ subscribers during the quarter. That was far above the 6.6 million expected. And the Disney Parks, Experiences and Products division saw revenues reach $7.2 billion, up from $3.59 billion a quarter earlier.
Meta Platforms (FB)
Meta Platforms tanked following the Feb. 2 earnings report. The $250 billion it shed in market capitalization was the greatest single-day loss in history for any corporation.
That doesn’t sound very promising. On the one hand, Meta Platforms witnessed a 20% increase in revenues on a year-over-year basis.
Taken subjectively, there are reasons for concern. As a Barron’s article points out, “For the first quarter, the company sees revenue of $27 billion to $29 billion, up between 3% and 11% from a year ago. That would be a sharp deceleration from 48% growth a year ago.”
Advertising revenues don’t look poised to see the slam dunk growth they formerly did. Analysts from ratings firm J. Stern & Co. provide a bullish take in the midst of the chaos.
Following the drop in market cap they note, “Meta’s shares were attractively valued going into these numbers and any further setback makes it an even more compelling opportunity for long-term investors.”
Meme Stocks to Buy: Snap (SNAP)
It looked like Meta Platforms’ earnings issues were going to be a big problem for Snap when it tanked along with FB. However, it quickly became apparent that Snap has the ability to escape Meta’s gravity.
The reason was clear: Snap reached a massive milestone in posting its first quarter of profitability. Snap revenues reached $1.297 billion in the quarter, leading to $22.55 million in net income. A year earlier Snap posted a $113.1 million net loss on $911.3 million in revenues.
Shares, which had dropped from $32 to $24 on the Meta news a day earlier, rebounded to reach $38 a day later. Given that SNAP stock carries an average target price of $55, now may be a great time to jump on it.
In my mind that fundamentally takes Snap to another level. It has proven that it isn’t simply a tech firm that can garner revenues while posting losses.
Snap’s daily average user growth continues to be a bright spot. In Q4 it increased by 20%. That was the fifth straight quarter in which DAU growth exceeded 20%. A steadily growing company in its first quarter of profitability is an interesting one.
AMD should be running higher for some time to come. It was one of the strongest stocks of 2021, having increased in price by 60%.
It’s fair to say that investors were very pleased with AMD stock in 2021. That should hold true for 2022 as well.
For one, AMD’s acquisition of Xilinx appears more and more likely since China’s State Administration for Market Regulation has approved the deal.
The planned acquisition was announced in late 2020 and China was the lone regulatory holdout. The deal should close right around Valentine’s Day.
Xilinx specializes in a type of chip called field-programmable gate arrays (FPGA). With the acquisition, AMD will be able to compete against Intel (NASDAQ:INTC), which also boasts an FPGA business.
On top of that great news, AMD also posted an earnings beat and a strong outlook.
Wall Street was anticipating AMD would post $4.5 billion in profits and 76 cent EPS. Instead, the firm posted $4.8 billion in profits and a 92 cent EPS. It expects to reach $5 billion in profit in the upcoming quarter.
Meme Stocks to Buy: Nvidia (NVDA)
The strong news from AMD sent Nvidia’s shares up as well. Those share prices look likely to rise when Nvidia releases earnings tomorrow (Feb. 16). The already strong semiconductor industry looks to be getting stronger.
AMD was not the only strong performer of late. Micron (NASDAQ:MU) posted strong results back in December. So, now that AMD has exceeded expectations there’s reason to believe Nvidia may follow suit. If that turns out to be true, it’ll certainly rise.
Indications from Wall Street suggest that may be the case. Raymond James (NYSE:RJF) pegs NVDA at a $365 share price. According to them, NVDA is experiencing growth that “can be found nowhere else in the semi space, and we don’t see that slowing anytime soon.”
The $365 target price from Raymond James is hardly an aberration, however. Nvidia has garnered an average $350 target price among all of the analysts with current coverage.
With growth scheduled to continue for the foreseeable future, it’s very hard to see why anyone should bet against Nvidia.
The bad news is that inflation rates for January reached 7.5%. That was the highest such reading since February of 1982, and also higher than the 7.2% expected.
It’s difficult to say that this is “good” news in any tangible way. As consumers, pretty much everything we buy is increasing in price. We feel it at the pump and in the grocery line.
Those two volatile components make up significant components of inflation figures. Even without those, inflation is still high. The remainder is referred to as the CPI. It increased by 6% during the month.
So, what’s the good news, and how does Coca-Cola (NYSE:KO) figure in? Both Coke and Pepsi are faring well amidst inflationary pressures. Particularly Pepsi.
Both companies beat Wall Street expectations, but Pepsi looked especially strong as “Coke’s organic revenue increased 9% in the quarter ended Dec. 31, driven by a 10% increase in prices. Organic revenue at PepsiCo, which also sells Doritos, Lays potato chips and other packaged foods, rose 11.9% with a 7% increase in prices.”
The company is a consumer staple stock. It should perform well in any market, but given recent performance amid inflation it looks particularly strong. Tech stocks will look increasingly worse as Fed rate pressure will mount. Investors will gravitate towards Pepsi because it has fared well and is a consumer staple brand.
Meme Stocks to Buy: Caterpillar (CAT)
Betting on Caterpillar stock right now is betting that the heavy equipment company can continue to navigate supply chain issues well.
That’s because the company reported a 23% increase in revenues in Q4, and a 22% increase for the full year 2021.
Even in a tough environment, Caterpillar proved that its operations wouldn’t be deterred. Operating profit margin hit 13.5% during 2021, up from 10.7% in 2020. That means that caterpillar reached operational goals established in 2019, prior to any mention of a pandemic.
Caterpillar has strong demand but supply bottlenecks as well. The company has a massive backlog worth roughly half of the sales it reported in 2021. No one knows if Caterpillar will be able to deliver moving forward. Opinions are mixed, but that’s the bet.
If Caterpillar can deliver on that backlog, it soars. Long-term, it looks like a solid bet as construction growth improves.
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.