Meme stocks are a relatively recent phenomenon, having started in 2020.
However, the underlying idea of investing in attention-grabbing, risky stocks is nothing new. There’s a clear trend of investors directing a greater percentage of market capital into such shares over the last few decades. Spikes occurred in 2000, 2008, and 2020. Fear and recession are clear correlates whether you’re talking about meme stocks or another craze.
I’d suggest treading lightly in meme stocks. That said, I’ve chosen what are mostly very safe shares that are receiving meme attention presently.
Newmont (NYSE:NEM) is the largest gold company by market capitalization and is currently worth more than $41 billion by that measure. Gold prices are rising, making Newmont interesting at the moment.
The price of gold has been trending up strongly since November, when it reached the last of several inflection points at $1,630. Prices had settled around $1,800, but banking failures sent prices above $2,000 over the last few weeks. Gold is again being perceived as a safe store of value. And Newmont is the subject of memes because of it.
Eve though it’s on a list of meme stocks, Newmont is a reasonable investment overall with or without the attention memes bring. In 2022, the company produced 6 million ounces of gold and an additional 1.3 million gold equivalent ounces. Gold equivalent ounces are other metals having a value equivalent to an ounce of gold.
The company expects to produce between 5.7 million to 6.3 million ounces of gold in 2023 with maximum sustaining costs of $1,250 per ounce.
A recent Wall Street Journal article questioned the logic behind Tesla’s (NASDAQ:TSLA) decision to continue to grow as fast as possible.
If the logic is flawed, it would make sense that investors should avoid buying Tesla. That isn’t the case because the logic behind seeking the greatest possible growth is sound.
Tesla is dealing with a host of issues. It has slashed prices on its Model Y vehicles by 17% in the U.S. and 21% in China. Rising competition from Chinese manufacturers and decreasing subsidies combine to make issues more difficult.
But the article concludes by suggesting that Tesla may not ultimately take the lion’s share of the EV market profits used to justify a growth-at-all-costs strategy.
That is a silly argument. Even if Tesla’s margins are falling, it should still approach the most growth it can at all costs. The time to focus on operational excellence is in the future. The current period is still a land grab in which growth is paramount. This is one of those meme stocks that you can count on.
Microsoft (NASDAQ:MSFT) is nothing like the high-risk stocks most synonymous with memes like AMC (NYSE:AMC) or GameStop (NYSE:GME). Microsoft doesn’t need memes to substantiate unsustainable demand in order to drive up its prices. Instead, it draws some meme attention and is a great stock overall.
Yes, the tech world is undergoing a sea change with leading firms, Microsoft among them, laying off tens of thousands of employees in 2023. But while those layoffs are painful for employees, they are positive for share prices. That may seem callous, but the low interest rate era is over and efficiency is back in style.
Anyway, Microsoft is attractive because the company remains an innovation powerhouse, not because it is exacting in its nature as a business. Microsoft is a leading investor in OpenAI, the developer of ChatGPT. It’s difficult to see a reason for Microsoft to falter substantially of its own accord. It simply has too much going and outside of regulatory concerns remains a brilliant investment.
Diamondback Energy (FANG)
Diamondback Energy (NASDAQ:FANG) had a great 2022, as did many energy stocks. Record oil prices led to an exceptionally strong year overall, with energy leading the markets 11 sectors in what was otherwise a terrible year.
The energy market is volatile, with multiple unpredictable variables at play. So, when OPEC+ announced production cuts recently, the shape of the market changed. Suddenly, the prospect of $100 per barrel oil is again a possibility.
Diamondback Energy is not the sole beneficiary, of course. Any firm that can fill the sudden supply gap stands to benefit. With Diamondback Energy we already know that the company expects to produce between 11.4% to 13.99% more oil in 2023 based on guidance.
That could mean the company increases its capital expenditures in an attempt to increase production further in order to capitalize on expected price increases. Whatever operational decision results, the overall implication is positive.
Caterpillar (NYSE:CAT) stock gets a lot of meme attention presumably because of its ticker symbol, CAT. The world loves cats and memes about them, so Caterpillar inevitably finds its way into the mix. Think cats operating Caterpillar machinery, etc.
Anyway, the result is that CAT stock finds its way onto this list of meme stocks to buy. Caterpillar trades at a discount right now, well below its average target price.
CAT shares are priced right at their 10-year median P/E ratio currently. So, they shouldn’t be at risk of falling much farther because of being overpriced. The reason they’ve trended downward in 2023 is broader fears of an economic slowdown.
Sales were up 17% in 2022 and sales momentum was even stronger in Q4 with 20% growth. But if a global recession strikes, overall output will decline and that will result in lower Caterpillar sales. That’s the gamble.
Hawaiian Holdings (HA)
Investors are waiting for airlines, including Hawaiian Holdings (NASDAQ:HA), to bounce back from the pandemic. HA stock is far less valuable than it was in 2019 when it traded between $25 to $30. It now trades for less than $9.
In 2019, the company recorded $224 million in net income on $2.83 billion in sales. In 2022, the company reported a net loss of $240.1 million from $2.64 billion in sales. It costs a lot of money to operate an airline. Airline groundings meant massive losses during the pandemic that continue to affect airlines today.
Investing in HA stock is primarily a statement of standing behind them as survivors. The state of Hawaii expects 9.799 million visitors in 2023. That’s fewer than the 10.42 million visitors in 2019 but much more than the 6.8 million 2021 visitors. The company is increasing its available seat miles (ASMs) by as much as 12.5% in 2023. All that really means is greater carrying capacity and therefore greater potential revenues.
I’d argue in favor of investing in Chemours (NYSE:CC) stock in 2023 because it is a stable business. The company produces chemicals and basic materials. As investors rotate out of riskier growth and into value, CC shares might retain more value.
Analysts are cutting earnings expectations as a banking crisis adds to an expected worsening of the economy overall.
That suggests market participants will be likely to seek companies with a higher likelihood of retaining value. Basic materials, like those Chemours makes are less volatile than growth stocks and the tech sector, which have seen capital inflows as the Nasdaq has risen by more than 15% in 2023.
Chemours is simply one of many publicly traded industrials/basic materials firms that will become more attractive if weaker-than-expected earnings come in. Chemours expects EBITDA of $1.3 billion in its best case scenario in 2023. That’s still lower than the $1.361 billion of EBITDA for the company in 2022. Investors could flood in to CC and other value shares on weakening earnings news.
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.