Meme stocks are not all about speculation. There are indeed meme stocks that can deliver 100% to 300% returns in quick time. However, if the fundamentals are weak, the downside can be equally sharp.

On the other hand, there are meme stocks to buy that represent companies with good fundamentals. Additionally, the business is at an early stage and if the execution is good, there is scope for massive value creation.

This column focuses on three meme stocks that represent attractive businesses. Further, these companies are from industries with positive tailwinds. Revenue, EBITDA, and cash flow upside can therefore be multi-fold in the next five years. I would therefore not be surprised if these stocks deliver at least 20x returns.

It’s however important to note that these growth stocks have a high beta. Even with multi-bagger returns potential, I would limit exposure to these meme stocks to 10% of the portfolio. Let’s talk about the business factors to be bullish on these ideas.

Riot Platforms (RIOT)

Riot Platforms (NASDAQ:RIOT) is among the undervalued meme stocks with high-growth potential. RIOT stock trades at a forward P/E of 14.8, which suggests a deep valuation gap considering the impending growth.

As an overview, Riot is a Bitcoin (BTC-USD) miner. The cryptocurrency has been in a consolidation zone and I expect rate cuts to be the next catalyst for BTC trending higher. This is likely to trigger an upside for RIOT stock.

Specific to the company, there are two points to note. First, Riot has strong fundamentals and ended Q1 2024 with zero debt and a cash buffer of $1.3 billion (including digital assets).

Further, Riot has aggressive expansion plans. As of Q1 2024, the Bitcoin miner reported a hash rate capacity of 12.5EH/s. The company is targeting to increase capacity to 31.5EH/s by the end of the year. The long-term target is to boost capacity to 100EH/s by 2027. If this target is achieved and Bitcoin remains in an uptrend, I expect 20x to 30x returns from RIOT stock.

Cronos Group (CRON)

There is a big addressable market for cannabis globally. As regulatory headwinds gradually wane, there will be massive wealth creators from the industry. Cronos Group (NASDAQ:CRON) is one stock that’s likely to be a 20-bagger in the next five to six years.

Cronos is deeply undervalued with the current market valuation of the company almost equal to the cash buffer of $855 million as of Q1 2024. I like the fact that Cronos has conserved cash to invest when regulations get friendlier.

Before 2023, the cannabis company had a presence in Canada and Israel. With an improving market perspective, Cronos has expanded into Germany, Australia, and the United Kingdom. I expect further geographical expansion that’s likely to translate into accelerated growth.

Last month, Cronos provided a $51 million secured non-revolving credit facility to GrowCo (50% ownership) to fund facility expansion. The objective is to benefit from increased global market demand for high-quality cannabis flowers. There is an impending reclassification of cannabis as a Schedule III drug in the United States. Cronos will likely pursue organic or acquisition-driven growth in the country.

Archer Aviation (ACHR)

Archer Aviation (NYSE:ACHR) is another meme stock that’s likely to deliver multi-fold returns by the end of the decade. The flying car industry is at a nascent stage. If Archer can leverage the early-mover advantage, massive wealth creation is likely. The positive to note is that business developments have been in the right direction.

In recent news, Stellantis (NYSE:STLA) invested an additional $55 million in Archer after the flight test milestone last month. It’s also worth noting that United Airlines (NYSE:UAL) is a strategic partner and investor in the company. Therefore, Archer has the backing of some big investors and this underscores the long-term business growth potential.

Besides the ongoing certification program in the United States, Archer has stitched local partnerships for expansion in the UAE, India, and Korea. These partnerships are likely to translate into stellar top-line growth in the next 36 months.

Archer is also on track to complete the construction of its high-volume manufacturing facility in Georgia later this year. The facility is likely to have a capacity to manufacture 650 eVTOL annually. This will support the company’s scale-up plans beyond 2025.

On the date of publication, Faisal Humayun did not hold (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.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.