In this article, we discuss the 10 rebounding meme stocks to buy in August.
Retail traders who use internet platform Reddit to exchange investment ideas are once again in the spotlight as meme stocks rally in the face of short-selling attempts by hedge funds. This battle for market supremacy grabbed headlines in early 2021 and seems to be making a comeback. According to a report by news platform Bloomberg, a group of meme stocks tracked by the platform has risen close to 4% in the past week, as hedge funds begin to disclose their short-selling bets. In the past six days, these stocks have been on a continuous rally.
Retail traders often prefer dealing in meme stocks as opposed to established names in the market like Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Shopify Inc. (NYSE:SHOP) since they are willing to take on riskier bets in the hopes of maximum reward. Ed Moya, a senior market strategist at foreign exchange firm Oanda, told the platform that the rally will only continue as long as a broad rally in growth stocks at the market lasts. A brief rally in tech stocks has pushed the growth-heavy NASDAQ Composite up 10% in the past month.
Mark Taylor, a sales trader at Mirabaud Securities, has said that the “smart guys” in the finance world, referring to hedge fund titans on Wall Street, are baffled and confused by the “sudden resurrection” in meme stocks. Trading volumes in these stocks have jumped in the past few weeks as individual retail traders appear more willing to take on hedge funds, compared to their appetite for risk in the first half of the year.
Our Methodology
These were picked based around the hype on these firms on internet platform Reddit. Companies that have little going for them in terms of basic fundamentals and analyst ratings but have grown popular because of social media interest were preferred for the list. A database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
Photo by Adam Nowakowski on Unsplash
“A Sudden Resurrection”: Rebounding Meme Stocks to Buy in August
10. Gogo Inc. (NASDAQ:GOGO)
Number of Hedge Fund Holders: 25
Percentage Increase in Share Price Over Past Month as of August 10: 5%
Gogo Inc. (NASDAQ:GOGO) provides in-flight connectivity and entertainment services. In late May, William Blair analyst Louie DiPalma noted that the new LEO service of Gogo Inc. may enable the firm to continue to offer the fastest broadband speeds in the business jet sector and will also almost double the addressable market for the company.
At the end of the first quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $369 million in Gogo Inc., compared to 25 the preceding quarter worth $241 million.
Just like Amazon.com, Inc., Sea Limited, and Shopify Inc., Gogo Inc. is one of the stocks popular among retail investors.
9. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 15
Percentage Increase in Share Price Over Past Month as of August 10: 104%
Bed Bath & Beyond Inc. owns and runs a chain of retail stores. The stock has soared sharply in the past week amid rumours of a short squeeze. The squeeze came following reports that the company is seeking to take on private loans as part of plans to bolster liquidity. In the earnings results for the first quarter of 2022, the company had reported that the cash pile it was sitting on had fallen to around $107 million, a sharp drop from the more than $1 billion it had in cash a year prior.
On August 9, Odeon Capital analyst Alexander Arnold downgraded Bed Bath & Beyond Inc. stock to Hold from Buy with a price target of $7.50, noting that the consensus view on the shares was overly dour.
At the end of the first quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $69 million in Bed Bath & Beyond Inc., compared to 17 in the previous quarter worth $73 million.
In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Bed Bath & Beyond Inc. was one of them. Here is what the fund said:
“Bed Bath & Beyond 5.165% 08/2044 declined 67.4% in the period. Bed Bath & Beyond Inc. reported 4Q21 sales of $2.05 billion, down 22% Y/Y, missing consensus of $2.08 billion. The company lost $0.92 per share in the quarter, down from 4Q20 adjusted EPS of $0.40, below analyst expectations for EPS of $0.03. Management noted supply chain disruptions and the Omicron variant led to inventory availability challenges, which had an estimated sales impact of $175 million, or 8.5% of 4Q21 net sales, and a 400 basis points (bps) Y/Y contraction in 4Q21 adjusted gross margin to 28.8%, driven by product cost increases and higher than anticipated freight and shipping costs. Additional headwinds in the quarter included general weakness in the retail segment, highlighted by big earnings misses from Walmart and Target, along with Moody’s downgrading Bed Bath’s corporate family rating from B1 to B2. The ratings agency cited increased execution risk of the company’s strategic turnaround initiatives and ongoing supply chain issues weighing on the company’s market share and profitability going forward as the main drivers for the downgrade. However, Moody’s maintained a stable outlook for the retailer due to the financial flexibility provided by the company’s liquidity position and low level of funded debt.”
8. Nikola Corporation (NASDAQ:NKLA)
Number of Hedge Fund Holders: 16
Percentage Increase in Share Price Over Past Month as of August 10: 35%
Nikola Corporation (NASDAQ:NKLA) develops energy and transportation solutions. The company posted earnings for the second quarter of 2022 on August 4, reporting a loss per share of $0.25, beating market estimates by $0.02. The revenue over the period was more than $18 million, beating analyst expectations by $1.5 million. The company also revealed that it was on track to deliver 300 to 500 Tre BEV trucks in 2022. In the second quarter, the firm produced 50 Tre BEVs in Coolidge and delivered 48 to dealers.
On August 5, Deutsche Bank analyst Emmanuel Rosner maintained a Hold rating on Nikola Corporation stock and raised the price target to $8 from $7, noting that the firm was making operational progress by ramping up production.
Among the hedge funds being tracked by Insider Monkey, San Francisco-based firm Inclusive Capital is a leading shareholder in Nikola Corporation with 8 million shares worth more than 86 million.
7. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 16
Percentage Increase in Share Price Over Past Month as of August 10: 50%
AMC Entertainment Holdings, Inc. (NYSE:AMC) owns and runs theaters in the US and Europe. On August 4, the firm posted earnings for the second quarter of 2022, reporting losses per share of $0.20, beating analyst estimates by $0.03. The revenue over the period was $1.1 billion, up more than 162% compared to the revenue over the same period last year but missing market estimates by $20 million. The firm said it managed 10,148 screens during the period, versus 10,099 in the first quarter.
On July 7, Citi analyst Jason Bazinet maintained a Sell rating on AMC Entertainment Holdings, Inc. stock and lowered the price target to $5 from $6, noting that the market was pressuring firms with low contractual revenue.
At the end of the first quarter of 2022, 16 hedge funds in the database of Insider Monkey held stakes worth $407 million in AMC Entertainment Holdings, Inc., compared to 17 in the preceding quarter worth $328 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in AMC Entertainment Holdings, Inc., with 11.6 million shares worth more than $286 million.
In its Q1 2022 investor letter, Bronte Capital, an asset management firm, highlighted a few stocks and AMC Entertainment Holdings, Inc. was one of them. Here is what the fund said:
“We are short, in small quantity, almost all the meme stocks. The aggregate “meme stock” position is a few percent, though no individual position is large. We will not name any of these positions other than AMC Entertainment Holdings, Inc. and Gamestop, the two most iconic meme stocks and the objects of the largest short squeezes in February 2020. Note the positions are small, but they are indicative of what is going on. AMC Entertainment Holdings, Inc. AMC is an over-levered chain of movie theatres in America with (broadly speaking) slightly less attendance every year. Both these companies raised enough money that bankruptcy is not an immediately likely outcome. (Both would have gone bankrupt except for the willingness of largely retail investors to provide them with much more cash.) Both have bad financial results.”
6. Lemonade, Inc. (NYSE:LMND)
Number of Hedge Fund Holders: 17
Percentage Increase in Share Price Over Past Month as of August 10: 44%
Lemonade, Inc. (NYSE:LMND) provides insurance products. In early August, the company announced that it had offloaded the Enterprise Business Solutions platform to digital insurance firm EIS in an all cash transaction. The solution was a claims automation and fraud detection platform which Lemonade licensed to large insurance carriers. The platform was owned by Metromile, a firm that Lemonade acquired in late July. The exact terms of the deal have not yet been disclosed.
On July 18, Piper Sandler analyst Arvind Ramnani downgraded Lemonade, Inc. stock to Neutral from Overweight and lowered the price target to $20 from $24, noting that enterprise tech spend could be pressured amid macro headwinds.
At the end of the first quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $41 million in Lemonade, Inc., compared to 19 in the preceding quarter worth $62 million.
In addition to Amazon.com, Inc., Sea Limited, and Shopify Inc., Lemonade, Inc. is one of the stocks popular on internet platform Reddit.
5. SmileDirectClub, Inc. (NASDAQ:SDC)
Number of Hedge Fund Holders: 18
Percentage Increase in Share Price Over Past Month as of August 10: 17%
SmileDirectClub, Inc. (NASDAQ:SDC) operates as an oral care firm. The company posted earnings for the second quarter of 2022 on August 8, reporting losses per share of $0.17, missing market estimates by $0.02. The revenue over the period was $126 million, down more than 26% compared to the revenue over the same period last year and missing market estimates by $15.8 million. The firm said it expected full year revenue of up to $500 million versus estimates of more than $600 million.
On June 17, Stifel analyst Jonathan Block maintained a Hold rating on SmileDirectClub, Inc. stock and lowered the price target to $1 from $2, noting that adjustments had been made to the overall outlook on the firm following reviews of first quarter 10-Q filings.
At the end of the first quarter of 2022, 18 hedge funds in the database of Insider Monkey held stakes worth $27 million in SmileDirectClub, Inc., compared to 16 in the preceding quarter worth $9 million.
4. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 18
Percentage Increase in Share Price Over Past Month as of August 10: 24%
GameStop Corp. (NYSE:GME) is a Texas-based retailer of entertainment and video game products. On July 20, news platform CoinDesk reported that the NFT marketplace of the video game firm was outpacing the volume of transactions of the NFT market of crypto giant Coinbase. Per the platform, the NFT Marketplace had done over 5,000 ETH in trading volume and $7.2 million in value since the launch on July 11. The marketplace is benefiting from the strong brand name of GameStop among retail traders.
On July 22, Wedbush analyst Michael Pachter maintained an Underperform rating on GameStop Corp. stock and lowered the price target to $7.5 from $30, noting that the shares remain at levels that appear disconnected from the fundamentals.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in GameStop Corp., with 3.6 million shares worth more than $601 million.
In its Q1 2022 investor letter, Bronte Capital, an asset management firm, highlighted a few stocks and GameStop Corp. was one of them. Here is what the fund said:
“GameStop Corp. is a retailer of video games on DVD ROM trying hard (and maybe with some success) to reinvent itself as an alternative computer game distributor. The company raised enough money that bankruptcy is not an immediately likely outcome. (GME would have gone bankrupt except for the willingness of largely retail investors to provide them with much more cash.)
Both have bad financial results. Gamestop’s last financial results were terrible. And both stocks more than doubled very rapidly in March from market caps that were absurd to market caps that are more absurd. We are of course completely aware that they can double again and again after that. Their valuations are absurd but if you double the price they are not twice as absurd. They are just similarly disconnected from reality.
The reason we want to talk about them is that it is indicative of what is going on. GameStop Corp., the most meme of all stocks, announced a possible stock split and the stock, after market that day, traded up 17 percent. We could joke that every child knows that cutting a pizza into more slices yields more pizza. But in this market, not accepting that stock splits add value is a recipe for losing money.”
3. BlackBerry Limited (NYSE:BB)
Number of Hedge Fund Holders: 20
Percentage Increase in Share Price Over Past Month as of August 10: 15%
BlackBerry Limited (NYSE:BB) provides security software and related services. On August 2, the company announced that it would be powering a new sedan developed by Chinese automaker Neta. The latter will use the QNX technology of the former for the sedan. According to the firm, the new tech would provide functional safety, cybersecurity, and reliability of the vehicle’s critical systems while offers users with an engaging, immersive, and digital-first driving experience.
On June 24, TD Securities analyst Daniel Chan maintained a Reduce rating on BlackBerry Limited stock and lowered the price target to $5 from $6.5, noting that the first quarter earnings beat of the firm was of low quality.
At the end of the first quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $421 million in BlackBerry Limited, compared to 15 in the preceding quarter worth $504 million.
2. Beyond Meat, Inc. (NASDAQ:BYND)
Number of Hedge Fund Holders: 23
Percentage Increase in Share Price Over Past Month as of August 10: 23%
Beyond Meat, Inc. (NASDAQ:BYND) makes and sells plant-based meat products. On August 4, the firm posted earnings for the second quarter of 2022, reporting losses per share of $1.53, beating analyst estimates by $0.39. The revenue over the period was $147 million, down more than 1% compared to the revenue over the same period last year and missing market estimates by $2 million. The firm said that full year revenue for 2022 would be in the $470 million to $520 million range against consensus estimates of $561 million.
On August 8, Mizuho analyst John Baumgartner maintained a Neutral rating on Beyond Meat, Inc. stock and lowered the price target to $27 from $21, noting that the firm missed market estimates on earnings for the second quarter.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Beyond Meat, Inc., with 2.2 million shares worth more than $107 million.
In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Beyond Meat, Inc. was one of them. Here is what the fund said:
“What about the other asset class that has attracted the most attention from the investment community in recent times? Beyond Meat, Inc. is the other company whose valuations we did not understand and whose share price has also declined drastically in the last year and a half.”
1. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 25
Percentage Increase in Share Price Over Past Month as of August 10: 5%
Upstart Holdings, Inc. (NASDAQ:UPST) owns and runs a cloud-based lending platform. The company posted earnings for the second quarter of 2022 on August 8, reporting earnings per share of $0.01, missing market estimates by $0.07. The revenue over the period was $228 million, up more than 17% compared to the revenue over the same period last year and missing market estimates by $7 million. The firm said it expected third quarter revenue of up to $246 million.
On August 9, Stephens analyst Vincent Caintic maintained an Underweight rating on Upstart Holdings, Inc. stock and lowered the price target to $23 from $28, noting that the third quarter revenue guidance of the firm did not seem credible.
At the end of the first quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $100 million in Upstart Holdings, Inc., compared to 20 in the preceding quarter worth $1.3 billion.
In its Q1 2022 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. was one of them. Here is what the fund said:
“Upstart Holdings, Inc. is an artificial intelligence (AI) and cloud-based lending platform. Upstart’s stock price has been very volatile, but its value has grown steadily. Last year, the company grew its revenue by over 250% organically, which materially exceeded our expectations. In addition, the company continues to generate robust free cash flow and is launching new products to expand its business. Upstart’s value has increased consistently since we first purchased it. Following our discipline, we have added to our position when its stock price has declined and its price to value ratio has improved, and we have reduced our stake when its stock price has risen faster than its value.”
You can also take a peek at 10 Russell 2000 Basic Materials Dividend Stocks to Buy and 10 Utilities Stocks with Over 3% Dividend Yield.
Follow Insider Monkey on Twitter
Suggested Articles:
- 10 Financial Services Dividend Stocks with Over 4% Yield
- 15 Best Momentum Stocks To Invest In
- 10 Cheap Hemp Stocks Redditors are Buying
This article is originally published at Insider Monkey.
