According to global online trading and investment firm IG Group, a meme stock “is a publicly listed company from any sector which gains traction due to an increased interest amongst retail traders on popular social media platforms like Reddit. These online communities partake in in-depth discussions speculating on the price performance of particular stocks.”
That works for me. Hopefully, it works for you.
For the month of August, IG was kind enough to list out individual ideas or themes that have attracted attention. Some ideas are the usual suspects, such as cineplex operator AMC Entertainment (NYSE:AMC). Others are far more interesting. Below are three meme stocks that just might pleasantly surprise investors.
Super Micro Computer (SMCI)
One of the top beneficiaries of the euphoria over artificial intelligence, Super Micro Computer (NASDAQ:SMCI) develops and manufactures high-performance server and storage solutions based on modular and open architecture in the U.S. and other international markets. With generative AI imposing intense demands on bandwidth, SMCI stock skyrocketed due to the underlying demand.
However, with a shift in global monetary policy sparking a massive rise in the CBOE Volatility Index or VIX, the already-stretched tech sector simply couldn’t hold on. SMCI stock in particular suffered a severe erosion of value, losing almost 40% in the trailing month. Still, for the contrarian, the red ink could present an opportunity.
Right now, shares are trading hands at 2.05X sales. That’s awfully low considering that in the running average over the prior year, the multiple stood at 3.16X. Also, throughout the first quarter, the price-to-sales ratio had soared to 6.23X.
By the end of this year, analysts are still looking for gargantuan growth to the tune $26.51 billion on the top line. That would be 77.4% up from last year’s tally of $14.94 billion. Therefore, it’s one of the meme stocks to consider.
PayPal (PYPL)
One of the biggest names in the broader financial technology (fintech) space, PayPal (NASDAQ:PYPL) specializes in digital payments. It also offers business management solutions, helping entrepreneurs handle various administrative tasks such as invoicing and bookkeeping. For independent contractors, PayPal is a lifesaver because of the inherent organization of data. That’s going to be important come tax time.
Further, the gig economy is exploding. According to Business Research Insights, the global gig economy reached a valuation of $355 billion in 2021. By 2031, the segment could be worth more than $1.86 trillion. If so, that would imply a compound annual growth rate (CAGR) of 16.18%.
Of course, PayPal isn’t going to be the exclusive fintech provider of the gig economy. But thanks to its brand footprint and recognition, it has a chance to expand its already dominant position.
Right now, shares trade hands at 2.2X trailing-year revenue. That seems discounted given that in the past year, the metric averaged 2.32X. More importantly, analysts are projecting 14.8% growth in the top line to $31.94 billion in fiscal 2024. PYPL is easily one of the meme stocks to consider.
Intel (INTC)
On IG’s list of meme stocks to focus on, Intel (NASDAQ:INTC) easily rates as one of the riskiest. That’s because the company failed miserably when it disclosed its Q2 earnings results. The chipmaker posted earnings per share of two cents. Unfortunately, analysts were anticipating a count of 10 cents. Further, Intel only generated sales of $12.83 billion, missing the consensus view of $12.92 billion.
Making matters worse was the year-ago comparison. In Q2 2023, Intel managed to deliver EPS of 13 cents against an estimated loss per share of 4 cents. On the revenue front, it generated $12.95 billion, again beating Wall Street’s target, in this case calling for $12.12 billion. Subsequently, INTC stock finds itself down about 44% in the trailing month.
Frankly, investors shouldn’t get comfortable attempting to catch falling knives: there’s a reason why this practice is dangerous. However, in the past five sessions, INTC stock dipped “only” 4.5%. It appears the negative acceleration is slowing.
Now, the problem is that analysts from the pessimistic to the optimistic anticipate a down year in sales growth for fiscal 2024. The question comes down to fiscal 2025. With the most bullish experts targeting revenue of $60.49 billion (compared to last year’s $54.23 billion), there may be an opportunity in INTC stock.
On the date of publication, Josh Enomoto 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.