This might feel like an odd time for all but the most speculative investors to go in search of meme stocks to buy. After all, the broader conditions that helped meme stocks rise to prominence have dissipated. Rather than easy money flooding the market, the Federal Reserve is in the midst of quantitative tightening. Rather than a rising market floating all boats, equities have corrected sharply and investors have become far more risk-averse. Moreover, data from major brokerages shows a significant decline in the average number of daily retail trades.
Yet, the meme trade is far from over and retail traders remain a force to be reckoned with. They’ve seen that their collective might can disrupt Wall Street. They’re young, risk-tolerant and have something to prove. That’s a powerful combination, and it means that some meme stocks can still rally.
A look at the meme stock tracker memestocks.org also reveals a potential shift in the names meme traders are targeting. In addition to high-risk plays with questionable financials are moderate-risk stocks with more attractive fundamentals that could offer solid upside potential. It’s the latter we will be focusing on here today.
Meme Stocks to Buy: Mistras Group (MG)
Mistras Group (NYSE:MG) provides technology-enabled asset protection solutions to customers in the oil and gas, aerospace and defense, renewable and nonrenewable energy, civil infrastructure and manufacturing industries. Its services include things like monitoring and data services, inspections, maintenance and consulting.
Mistras Group is an established firm that has been in business since 1978 and is expected to generate more than $690 million in 2022 revenue.
In the third quarter, revenue grew 2.2% year over year to $178.5 million while net income was up 29.4% to $4.4 million. Meanwhile, adjusted EBITDA of $18.6 million was roughly flat compared with a year ago.
The stock sold off following the Q3 announcement on Nov. 2, hitting a 52-week low of $3.38 on Nov. 9. Since then, shares have rebounded more than 50%. Just three analysts follow the stock, but all of them rate it a “buy.” And their average price target of $11 implies upside of more than 115% from current levels.
Silvergate Capital (SI)
Silvergate Capital (NYSE:SI) is a bank that specializes in fintech and cryptocurrency, two of the hardest-hit sectors in 2022. Therefore, it’s not surprising that the stock has lost more than 90% of its value over the past year amid several high-profile collapses of overleveraged crypto firms.
But Silvergate Capital isn’t some upstart firm serving the nascent crypto space, which is undergoing severe growing pains. Rather, the company is the parent of Silvergate Bank, which has been profitable during each of the past 24 years. Further, it has been serving the crypto industry since 2013. According to the company, more than 1,300 digital currency and fintech customers use its platform each day.
Despite its history in the sector and its reach, Silvergate Capital is far from unscathed by the recent turmoil. Deposits from digital asset customers totaled $3.8 billion at the end of the fourth quarter, down 68% from the previous quarter. That said, Silvergate remains solvent and plans to reduce its workforce by 40% this year to cut costs.
The bottom line here is that once fintech and crypto find a bottom and the risk-on trade returns, investors who bought SI at this depressed level are likely to see big gains.
Meme Stocks to Buy: Tesla (TSLA)
Tesla (NASDAQ:TSLA) is the leading meme stock in terms of mentions, according to memestocks.org. It has something meme traders seem to love: drama. In fact, the financials of the investment are often overshadowed by its headline-making CEO, Elon Musk.
In the latest Musk news, he and Tesla are facing a shareholder lawsuit over a 2018 tweet about taking the company private. Then there’s Twitter, which the enigmatic CEO did take private last year for $44 billion. Chaos ensued, including mass layoffs and a spike in hate speech on the social media platform.
All of this only serves as a distraction from the underlying business that is the electric vehicle powerhouse Tesla. Despite significant supply chain issues and COVID-19 lockdowns in China, Tesla managed to deliver a record 1.3 million EVs in 2022, up 40% from 2021 levels. The EV maker did, however, miss Q4 delivery estimates. This capped a rocky year for the company in which it failed to meet its growth targets numerous times and shares lost 65%.
TSLA is off to a strong start in 2023, though, rising nearly 7%. This is due in part to news that EV registrations in China surged 500% in the week of Jan. 9-15 from the prior week after Tesla decided to lower its EV prices in the country.
Tesla will remain a leader in the ongoing EV revolution. And if the worst is behind the markets, TSLA could soar as investors rush to buy shares at a discount.
FreightCar America (RAIL)
Most investors would probably assume railcar and components manufacturer FreightCar America (NYSE:RAIL) is more synonymous with value than growth. However, a growth stock is exactly what RAIL is.
In the third quarter, FreightCar America delivered 783 railcars. That represented a 55% increase over the same period a year earlier. Revenue surged 47% year over year to $85.7 million. And adjusted EBITDA of $1.6 million compared to a loss of more than twice that much in the year-ago quarter.
Management recently reaffirmed its guidance for the full year, calling for revenue of $340 million to $360 million. That target represents growth of 67.5% to 77% over 2021. Analysts are expecting the company to follow that up with 41.5% growth in 2023.
This impressive growth, combined with RAIL’s low share price, is likely to continue piquing retail traders’ interest and should lead to substantial gains.
Meme Stocks to Buy: DTE Energy (DTE)
I’m always pleasantly surprised when I find stocks like DTE Energy (NYSE:DTE) on meme stock lists. It is essentially the opposite of the high-risk names many have come to associate with niche investing chatrooms and websites. Nonetheless, it is getting more attention, and that’s a good thing.
DTE Energy is an electric utility and natural gas company in Michigan. Utility stocks are notably defensive. When the stock market is weakening, defensive stocks perform better. Whether or not the U.S. economy enters a recession, DTE’s customers are going to continue to pay for electricity at predictable rates. Plus, the stock’s 3.2% dividend yield makes it a solid income play.
DTE could garner attention as an environmental, social, and corporate governance investment, as well. The firm recently announced it is retiring two coal-fired power plants as part of its efforts to reduce its carbon footprint. And in August, DTE and Ford (NYSE:F) announced that DTE would provide 650 megawatts of solar energy in Michigan to Ford. That is the largest, single purchase of renewable energy by a utility in U.S. history.
Methode Electronics (MEI)
Methode Electronics (NYSE:MEI) is a meme stock that is benefiting from secular trends that are set to continue for the foreseeable future. The company provides custom interfaces, LED lighting and power distribution systems for use in high-growth markets including EVs.
The company reported record revenue of $315.9 million for its most recent quarter, up 6.9% year over year and 14.2% on a constant-currency basis. Electric and hybrid vehicle applications were responsible for 20% of net sales.
The company’s net income of $27.6 million was basically flat when compared with a year ago as the firm contends with higher costs amid rising inflation. Of course, this challenge is not unique to Methode.
Overall, the company has established itself as a name in the growing EV sector. Once there is some normalization of costs, Methode should be in a position where revenue is growing while costs are falling. That will spell higher profitability for the company and should translate to a higher share price in 2023.
Meme Stocks to Buy: Snowflake (SNOW)
The market may have turned its back on growth stocks like cloud data and warehousing software firm Snowflake (NYSE:SNOW), but the company continues to grow revenue at a rapid rate nevertheless. Revenue surged 76.5% and 65.2% in the past two fiscal years. Yet, Snowflake’s lack of profits caused many to shy away, with the stock’s value getting cut in half over the past year.
Those same investors are going to return to growth stocks eventually, perhaps at some point in 2023. And when they do, you can expect to see them clamoring to buy SNOW.
Analysts are calling for 68% revenue growth in fiscal 2023 and 46% growth in fiscal 2024. What’s more, they expect Snowflake to turn a small profit in the current fiscal year, with earnings of 1 cent per share. In the following fiscal year, earnings are forecast to jump to 22 cents per share.
Sooner or later, investors will again be intrigued by Snowflake’s growth narrative and a capital influx will occur.
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.