Generally speaking, the most extreme meme stocks should be avoided. These ideas lack fundamental rigor and are therefore subject to catastrophic volatility. However, it wouldn’t be fair to dismiss this unique space as entirely speculative. Some ideas make rational sense.
Indeed, casting aspersions on meme stocks prior to understanding the narrative is about focusing on the messenger rather than the message. With some long-term money to be made, it’s time to consider the legitimate players.
Starbucks (SBUX)
According to the website Memestocks.org, the popular coffeehouse Starbucks (NASDAQ:SBUX) ranked as the most popular idea among meme stocks. While I’m not 100% convinced of the upside narrative of SBUX, I can see why retail investors appreciate the idea. It’s a popular brand and with the labor market generally printing robust numbers, SBUX should rise on the broader optimism.
So far, the financial figures appear to support the concept of a continued rise in shares. Over the trailing 12 months (TTM), Starbucks posted net income of $4.16 billion, translating to earnings per share of $3.63. On the top line, the coffeehouse generated sales of $36.53 billion.
For the current fiscal year, analysts are targeting EPS of $3.67, a 2.54% increase from last year’s result of $3.58. On the top line, experts believe sales will hit $37.52 billion, a solid 4.29% increase from last year’s tally of $35.98 billion.
Even better, the high-side estimates call for EPS of $4.20 with a top line of $39.1 billion. Again, thanks to the robust jobs numbers, SBUX can potentially hit these targets. Therefore, it’s one of the meme stocks to consider.
Lululemon (LULU)
Based in Canada, Lululemon (NASDAQ:LULU) falls under the apparel retail sector. Together with its subsidiaries, Lululemon designs, distributes and sells athletic apparel, footwear and accessories under its namesake brand. Generally, the company targets customers who are interested in healthy lifestyle activities such as yoga and running.
Presently, analysts peg shares as a consensus moderate buy with a $435.60 average price target. While that implies a sizable upside swing, LULU ranks among the riskiest ideas for meme stocks. Since the beginning of the year, shares have stumbled badly. However, given the recent uptick in momentum, it’s possible that the apparel giant could make a comeback.
By the numbers, Lululemon posted net income of $1.55 billion during the TTM period, translating to EPS of $12.20. On the top line, revenue hit $9.62 billion. For the current fiscal year, experts are looking for EPS of $14.44, representing an 18.3% lift from last year’s result of $12.20. Revenue could jump to $10.99 billion, up 14.22% from $9.62 billion.
Again, against the backdrop of a robust labor market, LULU could be one of the meme stocks to gamble on.
Air Lease (AL)
Headquartered in Los Angeles, California, Air Lease (NYSE:AL) works in the industrial space. Specifically, it engages in the purchase and leasing of commercial jet aircraft to airlines worldwide. The company’s clients also include other leasing companies, financial services firms and other investors. Thanks to the concept of travel prioritization, AL appears to be a promising example of meme stocks to speculate on.
During the early years of the Covid-19 crisis, the phenomenon of revenge travel materialized. After being cooped up at home during the quarantines, pent-up demand sparked for experiential expenditures. While the acute nature of revenge travel has faded, people are still prioritizing their vacation. That’s good for airliners and in theory, should bode well for AL stock.
Financially, Air Lease’s TTM net income comes in at $552.07 million, translating to EPS of $4.96. During the same period, revenue hit $2.71 billion. Looking out to the end of the year, covering experts anticipate a 14% dip in EPS to $4.44. However, sales could rise 8% to $2.9 billion.
A little patience could see 2025 EPS reach $5.32 on sales of $3.2 billion. Thus, AL is one of the meme stocks to put on your radar.
Gen Digital (GEN)
Hailing from Tempe, Arizona, Gen Digital (NASDAQ:GEN) easily ranks among the most relevant meme stocks available. Falling under the infrastructure software space, Gen Digital offers cyber safety solutions for consumers in the U.S. and other key international markets. While the company name might not elicit recognition, its brands do. We’re talking Norton, Avast, Avira, AVG and CCleaner.
While everyone loves talking about the dramatic rise in technology and its myriad efficiencies, it also comes with a downside. People are always looking to score an easy buck and thus, nefarious activity has only increased with the broader connectivity. It’s simply vital for consumers and enterprises to protect themselves. So, GEN stock should be on the upswing.
Let’s look at the numbers. In the TTM period, the company posted net income of $616 million, translating to EPS of 96 cents. Revenue landed at $3.81 billion. For the current fiscal year, experts believe EPS could hit $2.22, up 131.46% from the prior year. Also, revenue may reach $3.95 billion, up nearly 4%. Thanks to the relevancy, GEN is cynically one of the meme stocks to buy.
McDonald’s (MCD)
Headquartered in Chicago, Illinois, McDonald’s (NYSE:MCD) really needs no introduction. As a fast-food giant, its brand represents American-style capitalism. I’m sure anybody remotely connected to civilization recognizes the Golden Arches logo. Anyways, MCD ranks among the top meme stocks, thanks in part to its business expansion and its consistent dividend payouts.
Right now, MCD offers a yield of 2.58% with a reasonable payout ratio of around 57%. Should the Federal Reserve decide to lower the benchmark interest rate, McDonald’s could become more attractive. Right now, MCD’s yield is okay but nothing special. Frankly, government bonds are competing against the fast-food giant. Take that competition away via lower interest rates and suddenly, McDonald’s looks more intriguing.
Financially, the company posted net income of $8.6 billion during the TTM period, implying EPS of $11.78. Revenue landed at $25.76 billion. For this year, analysts are targeting EPS of $12.32, implying 6.58% up from last year’s print of $11.56. Sales may hit $26.89 billion, up 5.46%. Amid the uncertainty, MCD ranks among the solid ideas for meme stocks to buy.
Robinhood (HOOD)
One of the enterprises that helped spark the fervor in meme stocks, Robinhood (NASDAQ:HOOD) is a name to discuss. On the aforementioned website, HOOD pinged as one of the most memed securities and I believe for good reason. Yes, the intensity of retail investing has died down from the Covid days. That was when seemingly everyone lived out their Gordon Gekko fantasies.
Fast forward to 2024, circumstances have changed. However, regular folks are still interested in building wealth through self-directed portfolio activities. After all, we’re talking about meme stocks because the underlying phenomenon once again sparked broader attention. With that, Robinhood’s gamified approach to investing can help attract new users. Also, the labor market being robust helps the business.
In terms of raw numbers, Robinhood posted net income of $127 million during the TTM period, translating to an EPS of 15 cents. Revenue during the period hit $2.04 billion. For the rest of the year, analysts are targeting EPS of 52 cents, a big swing from last year’s loss of 61 cents. On the top line, sales could rise 32.44% to hit $2.47 billion.
Taiwan Semiconductor (TSM)
With the stunning rise of the broader chip-manufacturing space, it should come as no surprise that Taiwan Semiconductor (NYSE:TSM) is one of the meme stocks to buy. Per its corporate profile, the company – known as TSMC – manufactures, packages, tests and sells integrated circuits (ICs) and other semiconductor devices. It provides a range of powerful solutions, including wafer fabrication, radio frequency and mixed-signal circuits.
Fundamentally, the surge of demand for Nvidia (NASDAQ:NVDA) processors – thanks mostly to artificial intelligence – should offer a downwind benefit to TSM. In other words, TSM ranks among the meme stocks to buy because of the riding-coattails effect. Nvidia shares a close partnership with TSMC. What’s good for the former should be good for the latter.
Financially, TSMC posted a net income of $27.2 billion during the TTM period. This translates to an EPS of $5.17. Further, revenue landed at $70.2 billion. Looking out to the rest of the year, analysts project EPS of $6.29, a sizable step from last year’s $5.19. Also, revenue could clock in at $85.06 billion, up 22.6W% from last year’s tally of $69.4 billion.
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.
