What exactly do people mean when they mention meme stocks? It’s a surprisingly controversial topic that inspires bizarre, unnecessary vitriol in public forums and on social media platforms. To avoid the drama, let’s just offer one possible definition.
According to a global online trading and investment company IG Groupa meme stock “is a publicly traded company from any sector that gains traction due to increased interest from retail traders on popular social media platforms such as Reddit. These online communities engage in in-depth discussions and speculation about the price movements of certain stocks.”
It works for me. Hopefully it works for you too.
For the month of August, IG was kind enough to list individual ideas or topics that have attracted attention. Some ideas are the usual suspects, such as Cineplex operators AMC Entertainment (NYSE:AMC). Others are far more interesting. Below are three meme stocks that may surprise investors to the upside.
Super Microcomputer (SMCI)
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One of the biggest beneficiaries of the euphoria surrounding artificial intelligence, Super-microcomputer (NASDAQ:SMCI) develops and manufactures high-performance server and storage solutions based on modular and open architecture in the US and other international markets. With generative AI placing enormous demands on bandwidth, SMCI stock soared on underlying demand.
However, when a change in global monetary policy triggered a massive spike in the CBOE Volatility Index (VIX), the already-stretched technology sector simply couldn’t hold up. SMCI stock in particular suffered a sharp drop in value, losing almost 40% in the last month. For the maverick, however, the red numbers could represent an opportunity.
Shares are currently trading at 2.05 times sales, which is shockingly low considering that the previous year’s moving average was 3.16. Additionally, the price-to-sales ratio rose to 6.23 in the first quarter.
By the end of this year, analysts are still expecting a gigantic growth of $26.51 billion in revenue, which would be a 77.4% increase from last year’s figure of $14.94 billion, making it one of the meme stocks to consider.
PayPal (PYPL)
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One of the biggest names in financial technology (Fintech), PayPal (NASDAQ:PYPL) specializes in digital payments. It also offers business management solutions that help entrepreneurs handle various administrative tasks such as invoicing and accounting. For independent contractors, PayPal is a lifesaver because of the inherent organization of data. This will be important when it comes to tax filing.
In addition, the gig economy is exploding. According to Business Research Insights, the global gig economy reached a value of $355 billion in 2021. By 2031, the segment could be worth more than $1.86 trillion. If true, that would mean a compound annual growth rate (CAGR) of 16.18%.
Of course, PayPal won’t be the only fintech provider in the gig economy. But thanks to its brand presence and recognition, the company has the opportunity to expand its already dominant position.
Currently, shares are trading at 2.2 times last year’s sales. That doesn’t seem to factor in, as the average over the past year was 2.32. More importantly, analysts are forecasting 14.8% revenue growth to $31.94 billion for fiscal 2024. PYPL is undoubtedly one of the meme stocks to consider.
Intel (INTC)
On the list of meme stocks to focus on, Intel (NASDAQ:INTC) is undoubtedly considered one of the riskiest. That’s because the company failed miserably when it released its second-quarter results. The chipmaker reported earnings per share of two cents. Unfortunately, analysts were expecting earnings of 10 cents. In addition, Intel only posted revenue of $12.83 billion, below the consensus forecast of $12.92 billion.
The year-on-year comparison made matters worse. In the second quarter of 2023, Intel managed to achieve earnings per share of 13 cents, with an estimated loss per share of 4 cents. In terms of revenue, the company generated $12.95 billion, once again exceeding Wall Street’s target of $12.12 billion in this case. As a result, INTC shares lost about 44% last month.
Frankly, investors should not get involved in catching falling knives: there is a reason why this practice is dangerous. However, over the past five sessions, INTC stock fell “only” 4.5%. It seems like the negative acceleration is slowing down.
The problem now is that analysts – from pessimistic to optimistic – are expecting declining revenue growth for fiscal 2024. So the question is what fiscal 2025 will bring. With the most optimistic experts targeting revenue of $60.49 billion (compared to $54.23 billion last year), there could be an opportunity in INTC stock.
At the time of publication, Josh Enomoto had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.
At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.
