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These 3 Meme Stocks Aren't as Risky as You May Think

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The ongoing social-media hype, which is pushing prices of many stocks significantly higher, reminds us of the famous quote by Hellen Keller, “Alone we can do so little, together we can do so much.”

Retail investors have realized that like big institutional investors, they too have the power to influence stock prices, and have grouped together on popular social-media platforms like Reddit and Twitter for collectively purchasing shares and out-of-money call options, primarily those that are in the short sellers’ radar.

The goal is to pile in the shares, primarily of fundamentally-weak companies, and push the prices higher to squeeze short sellers, such as hedge funds, out of their positions. As a mass buying is leading to price increase, short sellers are being forced to buy the shares to minimize their losses, thus pushing the prices even higher.

Being described as the ‘David vs Goliath’ battle, this move is the result of the mounting discontent among small investors as to why only big institutions will profit from a company’s failure. A significant increase in retail investing amid the pandemic has played a major role in driving such sentiment.

While the meme mania continues amid the bullish market sentiments, rational investors should be cautious with their choices as most of these stocks are fundamentally weak, and retail bets in them have barely followed any fundamental reasoning so far. They should also take caution with entry points as they might face huge losses if a quick profit booking starts or if the frenzy starts to cool down.

That’s why it would be wise to avoid meme stocks that don’t possess fundamental strength. However, it may not be a bad idea to take advantage of good entry opportunities in social media favorites that have robust revenue and earnings growth prospects.

Here are three such stocks that are being heavily discussed on Twitter, but have double-digit revenue and earnings growth potential. These stocks also carry a Zacks Rank #3 (Hold), at present.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMC Entertainment Holdings, Inc. (AMC - Free Report) : This movie theatre stock has been one of biggest names in the meme list from the beginning of the year. After cooling down for a few months, the stock skyrocketed again, gaining a whopping 307.1% over the past month. AMC has estimated earnings growth rate of 80% and revenue growth rate of 88.9% for 2021.

Ashford Hospitality Trust, Inc. (AHT - Free Report) : Shares of this real estate investment trust have rallied 64.2% in the past month. On Jun 8, Jim Cramer tweeted, “This ashford hospitality stock is another virtuous meme circle!!!” The company’s current-year earnings are projected to surge 97% year over year. The estimated revenue growth rate for the year is 44.2%.

Bionano Genomics, Inc. (BNGO - Free Report) : This life-sciences instrumentation stock has appreciated 32.7% in a month’s time on the meme craze. The company’s earnings and revenues are expected to grow 51.3% and 83.4% year over year for the ongoing year.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Ashford Hospitality Trust Inc (AHT) - free report >>

AMC Entertainment Holdings, Inc. (AMC) - free report >>

Bionano Genomics, Inc. (BNGO) - free report >>

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