Meme stocks – you know them as social-media-inspired securities that tend to be speculative. Generally speaking, it’s difficult to suggest otherwise. We’ve seen tons of money poured into failing or at least deeply struggling businesses. The idea is that if enough people wager on the upside, the target company could once again rise to prominence.
Granted, there’s a romanticism behind meme stocks. I suppose that’s why so many people have long theorized that Grand Duchess Anastasia Nikolaevna of Russia survived the brutal political purge. Again, there’s a romanticism here. Unfortunately for most meme plays, it’s all that there is: positive feelings but not much positive fundamentals. This “Nastya” isn’t going to resurrect.
However, not all speculative ideas from this investment strategy are wildly off the mark. Looking into the financial picture as well as the broader fundamentals, some social-media picks appear to be reasonably justified. If you’re willing to take the risk, these are the potentially rational meme stocks to consider.
Chewy (CHWY)
E-commerce specialist Chewy (NYSE:CHWY) – which specializes in pet products – is an obvious play among meme stocks. Basically, the godfather of memes, Keith Gill (also known as Roaring Kitty), decided to bet on CHWY stock. As you might expect, that sent shares flying higher. It’s been a rollercoaster ride but the technical profile appears relatively strong at the moment.
If I had to guess, Chewy could rise even more. For one thing, CHWY stock carries a high short interest of float of 16.25%. Also, its short-interest ratio comes in at 2.44 days to cover. Plenty of people are betting against CHWY. However, if circumstances go awry, it would take the bears half the business week to cover their short bets. In the meantime, that could lead to an explosive move higher.
Fundamentally, I appreciate that Americans love their pets. So far, the indication is that households are continuing to spend on their furry friends despite economic challenges. Therefore, I find that analysts projections of average revenue growth of 5.35% in this year and next to be credible.
Based on the aforementioned fundamental reality, the forecast could be understated.
Archer Aviation (ACHR)
Next-generation air mobility specialist Archer Aviation (NYSE:ACHR) is a compelling trade when it comes to meme stocks. While vertical transportation solutions already exist, here’s the problem: helicopters are noisy as heck and feature emission liabilities. That’s where Archer comes into play with its electric vertical takeoff and landing (eVTOL) aircraft. It’s like an electric vehicle but for the air.
A lot of compelling reasons exist as to ACHR’s status as one of the meme stocks. First, it’s “cheap,” which is an important psychological catalyst. Second, it commands a very high short interest of 24.38% of its float. Also, the short ratio comes in at 4.64 days to cover. A panic here could lead to a phenomenon known as a short squeeze. That’s very enticing if you’re on the contrarian (bullish) side of the fence.
Now, one thing that does keep a lid on ACHR stock among more conservative investors is the competition. Archer isn’t the only player in this game. Still, what’s enticing here is that Archer could generate revenue of $2.25 million by year’s end. By fiscal 2025, sales could rise to $55.08 million.
Granted, that would yield a projected sales multiple of nearly 28X, which is extremely high. Still, by bagging something on the top line, ACHR could pop northward.
Rocket Lab USA (RKLB)
I know that artificial intelligence commands the business headline spotlight. But it wasn’t that long ago that seemingly everyone was talking about the space economy. Guess what? The sector is still relevant and that makes Rocket Lab USA (NASDAQ:RKLB) one of the meme stocks to consider. Sure, the sector has had its fair share of implosions. Still, RKLB appears very promising.
Fundamentally, Rocket Lab continues to successfully launch rockets into orbit. While the underlying payload of the company’s Electron rocket may be relatively small, prospective clients will be heartened by the strong track record. If you want to look at the situation in a macabre sense, a massive payload doesn’t mean much if it doesn’t arrive safely to its destination.
Rocket Lab is also very attractive for the financial projections. For fiscal 2024, analysts believe that sales could hit $427.37 million, up 74.7% against last year’s print of $244.59 million. In the following year, revenue could hit $590.41 million, up 38.1%.
Better yet, shares trade at 9.71X trailing-year sales. That’s technically overvalued. However, in the past year, the metric averaged almost 10X.
Eos Energy (EOSE)
Based in Edison, New Jersey, Eos Energy (NASDAQ:EOSE) falls under the industrial sector. Specifically, the company specializes in electrical equipment and parts. Per its public profile, Eos develops zinc-based energy storage solutions for utility-scale, microgrid and commercial and industrial applications. With enterprises and industries embracing next-generation energy solutions, EOSE stock appears very relevant.
And that dispels the myth that meme stocks are 100% speculative vehicles. No, in some cases like Eos, they align with a sensible thesis. That said, Eos is a speculative idea. The company isn’t profitable, which may be a concern amid the challenging environment. Also, in the past four quarters, the company incurred a loss per share of 35 cents, worse than the anticipated 30 cents.
If that wasn’t bad enough, EOSE stock trades at 25.52X trailing-year sales. That’s well above the metric seen between the first quarter of 2023 to Q1 2024, which was 9.91X. However, analysts believe that by year’s end, sales could rocket to $67.45 million. If so, that would be a 311.8% rise.
In the following year, revenue could soar to $305.17 million. Thus, a little patience could go a long way.
Longeveron (LGVN)
Operating in the broader healthcare arena, Longeveron (NASDAQ:LGVN) is a biotechnology firm. It’s a small entity, comprising only 23 full-time employees. However, it’s also an interesting bit of speculation. Per its corporate profile, Longeveron develops cellular therapies for aging-related and life-threatening conditions. Its main investigational product is Lomecel-B and targets various conditions like frailty, Alzheimer’s disease and hypoplastic left heart syndrome.
As you might expect, Longeveron – being a clinical-stage biotech – isn’t a profitable enterprise. In the past four quarters, the company incurred a loss per share of $2.40. That was even worse than the anticipated loss of $2.21 per share. This led to a negative “earnings” surprise of 8.3%.
However, in the trailing 12 months (TTM), Longeveron posted sales of $978,000. By year’s end, experts believe that sales could reach $1.65 million. That does seem reasonable given the present trajectory. Further, in fiscal 2025, the top line could expand to $2.49 million, up 50.9%.
LGVN stock trades at 9.81X trailing-year sales. That’s lower than the 10X seen during Q1. If the company hits the projections, LGVN could go places, making it one of the meme stocks to watch.
Intuitive Machines (LUNR)
Technically falling under the aerospace and defense industry, Intuitive Machines (NASDAQ:LUNR) is another candidate among meme stocks in the burgeoning space economy. According to its profile, Intuitive’s space systems and space infrastructure enable scientific and human exploration and utilization of lunar resources. That’s especially compelling given the geopolitical conflicts that arise from terrestrial resource constraints.
Of course, that’s looking well into the future. What about the present-day situation? It’s somewhat of a mixed bag but it’s also a bag leaning toward the bullish side of the aisle. For example, in Q1, the company suffered a big loss of $2.70.
However, it also enjoyed big wins in the past three quarters. For the trailing year, Intuitive’s average earnings per share hit 13 cents. That easily beat out the expected loss of 15 cents per share.
For fiscal 2024, experts anticipate sales to hit $228.35 million, that’s up 187.2% from last year’s tally of $79.52 million. Also, the high-side estimate calls for $239.2 million. In the following year, revenue may reach a whopping $392.45 million. If these forecasts come true, LUNR is one of the meme stocks that could fly.
ChargePoint (CHPT)
A wild ride if there ever was one, I’ve not always been accurate in calling EV charging infrastructure player ChargePoint (NYSE:CHPT). Still, if you’ll allow me to toot my own horn, I have an InvestorPlace column called Trade of the Day. In last June, I said that CHPT stock would be the beneficiary of the investment deal between Volkswagen (OTCMKTS:VWAGY) and Rivian (NASDAQ:RIVN).
Of course, Rivian will be getting the funds from Volkswagen. However, implicit in the deal is that EV makers are now targeting the middle-income consumer group. This group is more numerous, yes, but it also encounters more challenges, such as the lack of home-charging access (relative to more affluent buyers). Therefore, in my estimation, public charging will see a big boom.
It’s been a wild series of trades and it’s difficult to predict the day-to-day gyrations. Here’s the thing, though. Since the tail end of June, CHPT stock has been flying. I think circumstances appear very favorable for ChargePoint. Analysts are calling for fiscal 2026 (calendar 2025) sales to hit $670.87 million, a far cry from 2023’s haul of $506.64 million.
Because of the consumer target pivot, I think it’s a justified forecast. Therefore, CHPT is one of the meme stocks to consider.
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.