For investors who missed the meme stock rally of 2021, there seems to be another opportunity that’s brewing. Some of the popular meme stocks have surged in the recent past. It’s an indication of the point that the markets are warming-up for another round of euphoria.
From a fundamental perspective, there is one factor that can act as a catalyst for a big meme stock rally. The fed is likely to initiate rate cuts in the second half of 2024 as GDP growth decelerates. Of course, the idea is to spur consumption and investment spending by lowering the cost of money.
However, it’s worth noting that easy money in the financial system translates into speculative activity across risky asset classes. I therefore expect significant price-action in equities, commodities, and cryptocurrencies.
Within equities, penny and meme stocks are likely to be in the thick of action. I expect multibagger returns in several stocks at the blink of an eye. This column discusses three meme stocks that are likely to skyrocket.
Bitfarms (BITF)
Bitfarms (NASDAQ:BITF) is among the top meme stocks to buy for multibagger returns in the next few quarters. Even as Bitcoin (BTC-USD) trends higher, BITF stock has corrected by 30% for year-to-date.
The reason being equity dilution and discounting of a relatively challenging mining environment after Bitcoin halving. However, the stock seems to have bottomed out and is likely to skyrocket on potential rate cuts.
I believe that easy money policies will be positive for Bitcoin as the dollar weakens. If Bitcoin scales $100,000, I would not be surprised with BITF stock trading in double digits.
It’s worth noting that Bitfarms has plans to expand hash rate capacity from 7EH/s in Q1 2024 to 21EH/s by the end of the year. This is likely to translate into stellar revenue and EBITDA growth for this low-cost Bitcoin miner.
I must add here that as of Q1, Bitfarms reported a zero-debt balance sheet. Further, the Company had a strong liquidity buffer of $124 million, the Company is well positioned to pursue aggressive expansion.
IAMGOLD Corporation (IAG)
Rate cuts in the next few quarters would also imply that the bull run for gold sustains. Gold will likely be trading above $2,500 an ounce if the first-rate cuts come before the end of the year. I would therefore consider exposure to gold mining stocks besides holding physical gold.
IAMGOLD (NYSE:IAG) stock has surged by 58% for year-to-date. However, the penny stock remains undervalued at a forward P/E of 14.7. The recent correction from highs is therefore a good opportunity to accumulate before a renewed rally.
In a recent development, IAMGOLD has raised $300 million with the intention of increasing stake in the Côté Gold asset to 70%. It’s worth noting that Côté commenced production in April and is likely to be a production growth catalyst for IAMGOLD for the coming quarters. It’s also worth noting that Côté has a mine life through 2041 and is possibly the third largest gold mine in Canada.
Therefore, IAMGOLD is positioned to benefit from higher realized price coupled with production upside. As cash flows swell, the Company will be positioned to invest in its attractive pipeline of assets that include Gosselin, Nelligan and Chibougamau district.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) plunged by 60% in the last 12 months. It’s worth noting that PLUG stock has been largely sideways since November 2023. It’s an early indication that the stock has bottomed and I expect a big rally from current levels.
From a fundamental perspective, there are two reasons to be bullish. First, potential rate cuts would imply lower cost of money. This is likely to benefit Plug Power with the Company having aggressive investment plans.
Further, Plug Power recently announced that the Company has received a conditional loan guarantee of $1.66 billion from the U.S. Department of Energy. The loan would be used to finance the construction of six green hydrogen facilities. This news is likely to boost the confidence of investors. Further, in a meme stock rally, this is a perfect catalyst for PLUG stock to surge higher.
I must add that Plug Power is looking to expand beyond the United States. As global hydrogen investments increase, there is ample headroom for growth and value creation.
On the date of publication, Faisal Humayun did not hold (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.
