When the markets are trading near all-time highs, it’s important to remain cautious. At the same time, a small part of the portfolio can be allocated to high-risk bets to make full utilization of the bull market. With the possibility of rate cuts in the coming quarters, the rally possibly has some more juice. The focus of this column is on meme stocks to buy that can deliver big returns in quick time.
It’s worth noting that 3x to 5x returns in meme stocks in quick time is not an unrealistic expectation. However, with the markets at all-time highs, it makes sense to be prudent. The meme stocks discussed have the potential to deliver 100% to 200% returns in the next 12 to 18 months.
Further, it’s important to stay away from stocks with weak fundamentals. In a speculative rally, stocks with poor fundamentals might seem enticing. I would however stick to names that have good fundamentals and the business is poised for robust growth.
Riot Platforms (RIOT)
There is no doubt that Bitcoin (BTC-USD) halving will have an impact on the crypto miners from the perspective of cost and the number of Bitcoin mined. However, after a correction of 33% in the last 12 months, Riot Platforms (NASDAQ:RIOT) stock looks undervalued. With the possibility of Bitcoin making new highs in the coming months, I am bullish on RIOT stock surging higher.
From a fundamental perspective, Riot reported a cash buffer of $688 million as of Q1 2024. Further, the company had $606 million worth of Bitcoin holding. Therefore, with liquid assets of $1.4 billion and a zero-debt balance sheet, Riot is positioned to make aggressive investments.
As of Q1 2024, the Bitcoin miner reported hash rate capacity of 12.4EH/s. By the end of the year, the company is targeting capacity of 31.5EH/s. With visibility for robust revenue and EBITDA growth in 2025, I am bullish on a strong rally.
Blink Charging (BLNK)
After an extended period of correction, Blink Charging (NASDAQ:BLNK) stock has remained sideways for year-to-date. I see this consolidation as a good buying opportunity before the stock skyrockets.
It’s worth noting that significant investment is needed in the EV charging infrastructure space. With Blink Charging having presence in North America and Europe, the addressable market is big. This will ensure healthy growth for the company in the coming years. For Q1 2024, Blink reported top-line growth of 73% to $37.6 million.
Besides healthy revenue growth, there is another reason to be bullish on Blink. The company has guided for positive adjusted EBITDA by December 2024. With operating leverage and increasing services revenue, it’s likely that EBITDA margin expansion will sustain in the coming years. Achieving EBITDA breakeven is a major impending catalyst for BLNK stock upside.
In a recent development, Blink received “In Process” designation granted by the Federal Risk and Authorization Management Program for its EV charging solutions. This takes the company closer to providing cloud-based EV charging services to the U.S. government.
EHang Holdings (EH)
EHang Holdings (NASDAQ:EH) is among the most attractive flying car stocks to buy. For year-to-date, EH stock has declined by almost 30%. This is a good accumulation opportunity with the eVTOL industry poised for significant growth in China.
In a major development this week, the Civil Aviation Administration of China (CAAC) accepted the company’s pilotless eVTOL air operator certificate application. This sets stage for stellar growth in the next 24 to 36 months. It’s worth adding here that the CAAC had awarded EHang with the production certificate in April. This had cleared way for mass production of its EH216-S.
Besides these developments in China, the flying car company is also focused on international expansion. With international partnerships, the company has conducted demo flights in the UAE, Saudi Arabia, Japan, Spain, and Costa Rica. Growth acceleration will be supported on the back of geographic expansion. It’s therefore a matter of time before EH stock surges higher.
Miniso Group (MNSO)
On the back of strong growth, Miniso Group (NYSE:MNSO) stock had touched highs of $29.5 in September 2023. However, the stock has been in a correction mode with negative sentiments related to Chinese stocks being a key reason.
At a forward P/E of 14.6, MNSO stock looks undervalued and offers a dividend yield of 2.28%. I am bullish on the lifestyle retailer stock trading at new highs in the next 12 to 18 months.
The first positive is that Miniso has continued to report healthy growth. For Q1 2024, the company’s revenue increased by 26% on a year-on-year basis to $515.7 million. For the same period, the adjusted EBITDA increased by 36.7%. Therefore, strong growth has been associated with EBITDA margin expansion.
The second reason to be bullish is ambitious growth plans. Miniso is targeting to open 900 to 1,100 new stores annually between 2024 and 2028. For this period, the company expects revenue growth at a CAGR of over 20%. With these positives, I expect a strong reversal for MNSO stock.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stock has been subject to a massive sell-off on the back of a sharp correction in lithium. The markets react on extremes and considering the asset potential, there is little doubt that LAC stock is deeply undervalued. A 100% rally from current levels can come in quick time.
As an overview, Lithium Americas is the owner of the Thacker Pass asset in the United States. The asset has an after-tax net present value of $5.7 billion. Further, once both phases commence operation, the asset is likely to deliver an annual EBITDA of $2 billion.
It’s worth noting that General Motors (NYSE:GM) has infused $650 million in the company in two tranches. The automobile company also has an offtake agreement from the first phase of production. Further, the U.S. Department of Energy has approved a conditional loan of $2.26 billion for project construction. These investments clearly indicate the asset potential. It’s a matter of reversal in lithium prices before LAC stock goes ballistic.
IAMGOLD (IAG)
Gold has been trending higher this year and with the possibility of rate cuts, it’s likely that the precious metal will remain in an uptrend. Citi believes that gold is likely to trade at $3,000 an ounce in the next 6 to 18 months. I therefore believe that the best part of the rally for gold mining stock is due.
IAMGOLD (NYSE:IAG) stock has rallied by 45% in the last 12 months. However, at a forward P/E of 12.3, the stock looks undervalued and is likely to surge higher with the precious metal.
An important point to note is that the catalyst for the rally is not just upside in gold. The company has a positive outlook when it comes to production growth. In March, IAMGOLD commenced production from the Côté Gold asset in Canada. The asset has a mine life until 2041 and is among the largest gold mines in the country.
With production to be ramped-up from Côté in the coming quarters, IAMGOLD is positioned for healthy revenue and cash flow upside. I must add that the asset has an attractive all-in-sustaining-cost of $851 an ounce and this will support EBITDA margin expansion.
Li Auto (LI)
Li Auto (NASDAQ:LI) is another fundamentally strong meme stock to buy at attractive levels. For year-to-date, LI stock has declined by 47% and trades at an attractive forward P/E of 18.8. Even if LI stock doubles from current levels, it will be below the 52-week highs of $47. I see a big rally from oversold levels.
The first point to note is that industry sentiments have been weak. Further, Li Auto has revised its growth guidance on the downside for the year. While this has dampened sentiments, Li has strong fundamentals and growth remains attractive.
For Q2 2024, Li reported deliveries of 108,581 cars, which was higher by 25.5% on a year-on-year basis. I must add that the EV company ended Q1 with a robust cash buffer of $13.7 billion. With aggressive retail expansion in China, investment in technology, and launch of new models, the outlook remains positive.
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.
