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7 Meme Stocks You Should Keep a Close Eye on for Real Potential

Social media can be a beautiful thing, providing a platform for everyday individuals to express their opinions on a range of subjects. At the same time,…

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This article was originally published by Investor Place

Social media can be a beautiful thing, providing a platform for everyday individuals to express their opinions on a range of subjects. At the same time, a more dubious element to online communities exists. One phenomenon that has caused serious divisions among those on Wall Street is the rise of meme stocks.

Driven by platforms such as Reddit, the movement gained mainstream attention — many would call it notoriety — through its short-squeeze tactics. Essentially, the original meme stocks represent the ultimate contrarian trade, betting on companies that market professionals are betting against. With enough coordinated pressure, it’s possible for bearishly targeted securities to rise (often dramatically) in value, forcing short traders to cover their positions.

Of course, the very act of covering creates upward momentum in the underlying equity unit, which facilitates massive profitability for the bulls and devastating losses for the bears. Initially, the ethos behind meme stocks aligned with an understandable and empathetic objective: getting payback from the hedge fund managers that nearly imploded the global economy in 2008, causing untold pain on Main Street without repercussions.

But later, meme stocks took on an Animal Farm twist — yes, George Orwell did write other books besides Nineteen Eighty-Four. When meme traders piled into private prisons simply on the basis that they featured high short interest, it certainly appeared that the moral directive transitioned into capitalistic rationality, the very ethos that drives hedge funds.

So yes, there’s plenty about meme stocks that either don’t make sense or sound downright contradictory. However, we shouldn’t throw the baby out with the bathwater. Some meme stocks might perform well over the long run because they’re tied to viable businesses. That social media loves them is an added bonus.

Here’s my choices for seven meme stocks to pay attention to:

  • General Motors (NYSE:GM)
  • Amazon (NASDAQ:AMZN)
  • Sandstorm Gold (NYSE:SAND)
  • Robinhood (NASDAQ:HOOD)
  • Taiwan Semiconductor (NYSE:TSM)
  • Quad (NYSE:QUAD)
  • Forward Industries (NASDAQ:FORD)

For full transparency, I selected my ideas from the list of meme stocks which, appropriately enough, memestocks.org provides on its website. Keep in mind that while I believe these businesses would have strong upside potential irrespective of the meme-trade phenomenon, the unprecedented nature of this movement could impose unforeseen volatility risks.

Meme Stocks to Watch: General Motors (GM)

Source: Katherine Welles / Shutterstock.com

To be completely blunt, I didn’t expect too many meme traders to be interested in General Motors. Unlike some other high-profile meme stocks, I didn’t come across any stories of hedge funds ganging up on GM stock. As of the latest read (Aug. 13), the iconic American automaker features a short percentage of float of only 1.6%.

I look at it this way — GM stock is so boring that no one would even think about shorting it. So, why the interest in shares among the social media crowd?

I think it’s safe to say that the automaker’s leadership team really lit a fire under the seats of everyone throughout the organization. A prime example is the development of the eighth-generation Corvette, which caused the entire automotive community to stand up and take notice. If it weren’t for the devastating impact of Covid-19, Chevrolet dealers would be churning out $60,000 mid-engine supercars.

More importantly, GM signaled its commitment to the electrification of transportation. With the upcoming all-electric Hummer SUV, GM will allow their customers to have their eco-friendly cake and eat it too.

Amazon (AMZN)

photo of an Amazon (AMZN) box on wood floor of homeSource: Hadrian / Shutterstock.com

A longtime favorite among investors — whether you follow meme stocks or traditional equity picks — Amazon proves that in some cases, we’re not all that different. Sure, I don’t think AMZN stock is going to light up the leaderboard in terms of outright performance anytime soon. However, with so many relevant business units underneath its tentacles, Amazon is basically too big to fail.

A perfect example of Amazon’s dominant posture is how the company has performed during the ongoing pandemic. Since the fall of 2018 till just before the global health crisis, AMZN stock posted disappointing returns. Following a brief dip into the doldrums of March 2020, however, shares have pinged new record highs. Regular economic dynamics couldn’t get AMZN out of its funk. Instead, it took a global catastrophe for Amazon to realize its true potential.

Moving forward, there’s a case to be made that shares could undergo a correction. With so many people ready to reclaim their lives, online shopping could take a hit. Then again, habits can form between 18 days to 254 days, which neatly fits into how long we’ve endured the new normal. Given this cynical backdrop, AMZN is one of the meme stocks to consider.

Meme Stocks to Watch: Sandstorm Gold (SAND)

A gold bar along with some coins made of precious metals. gold stocksSource: allstars / Shutterstock.com

As I’ve stated in many articles for InvestorPlace, I think there’s a place for a modest amount of precious metals in your portfolio. While I don’t want to get into a fatalistic discussion, the financial engineering that global central banks engage in can’t be great for long-term stability. Thus, if the fearmongers are correct, you’ll want to have some exposure to hard assets.

And that mentality also extends to precious metal miners like Sandstorm Gold, one of the most popular meme stocks of its category. In my view, I believe metals-based assets make sense based on the fear trade, that the underpinnings of the economy are not nearly as robust as advertised. Understandably, though, inflation fears have inspired meme traders to buy into SAND stock.

Except there’s one problem with this particular trade — SAND has been among the ugliest meme stocks, shedding almost 13% of market value over the trailing month. Could inflation fears be overhyped?

Possibly, although again, I’m keying into the fear trade component. For SAND specifically, far more reliable mining stocks exist. Nevertheless, I wouldn’t be opposed to throwing some speculation funds in here to trade with the meme folks.

Robinhood (HOOD)

Robinhood stocks: app logo seen on smartphone on US dollar banknotesSource: mundissima / Shutterstock.com

The platform that started it all, trading app provider Robinhood initially garnered tremendous interest soon after the Covid-19 pandemic dramatically changed our lives. Suddenly, millions of white-collar workers found themselves operating remotely, which meant more time for stock trading. Well, they ought to be working but you know how that goes.

Indeed, the Wall Street Journal opined back in July of last year that everybody had become a day trader. “Bored, isolated and out of work amid the pandemic, millions of Americans are chasing stock-market glory–and bragging about it online.” That bragging, by the way, almost always seemed to be a screen capture from the Robinhood app.

However, the crisis hasn’t exclusively been a tailwind for HOOD. Back when the first meme stocks gained serious momentum, Robinhood caught flack from all angles when it appeared that the company deliberately imposed roadblocks on popular securities. In fact, the circumstance got so out of hand that angry customers showed up at Robinhood’s headquarters to demand an explanation.

Still, Robinhood carries significant cachet, in no small part to its gamified interface. Over the long run, HOOD might do well.

Meme Stocks to Watch: Taiwan Semiconductor (TSM)

image of TSM semiconductor office buildingSource: Sundry Photography / Shutterstock.com

Though not quite as popular as some of the other meme stocks on this list — at least as of this writing — Taiwan Semiconductor nevertheless attracted its fair share of social media-based traders and for good reason. Due to the ongoing semiconductor crisis, anything related to computer chip production has soared in demand since the beginning of this year.

To be fair, an argument exists that the supply chain disruption argument is overplayed in that we may have passed peak supply concerns already. Some experts believe that the shortage problem will fade by the end of this year for most products. However, it’s also fair to point out that this circumstance is difficult to predict — just look at how many experts weighed in on the Covid-19 crisis.

As well, there’s no real consensus on when this problem will go away. Even assuming the shortages will see resolution by end of 2021, analysts claim that the holistic recovery process will “require almost all of 2022 for this chip supply to make its way through the supply chain to end-users.”

As the world’s largest dedicated semiconductor foundry, TSM could still offer upside, especially if the experts are wrong about their optimism.

Quad (QUAD)

A test page with various bright colors is shown printing from a wide format inkjet printer.Source: 3d_man / Shutterstock.com

A commercial printing company based in Sussex, Wisconsin, Quad has really transitioned to become a global marketing technology partner, facilitating strong return on investment for its clients through data-driven solutions. What distinguishes Quad from the competition is that the company is essentially a one-stop shop. From gaining consumer insights to creative services to print, media and digital engagement, Quad helps its enterprise clients expand their business footprint.

To be fair, some components of the marketing industry took a hit because of the unprecedented impact of the Covid-19 crisis. After all, with millions of people stuck working at home, certain print-based campaigns didn’t make much sense. Yet if one looks at the declining personal saving rate relative to its blistering April 2020 high, it seems the consumer is ready to spend.

Factor in the retail revenge concept — or the phenomenon where people who were denied consumer-related experiences last year are ready to make up for lost time this year — and you have an intriguing case for QUAD stock. If you believe in the economic recovery narrative, this might be one of the meme stocks to check out.

Meme Stocks to Watch: Forward Industries (FORD)

Two people take notes on paper in a brightly-lit room with a laptop, a tablet, and a phone all on the same table.Source: Have a nice day Photo / Shutterstock.com

Billed as a “global design, manufacturing, sourcing and distribution group,” Forward Industries wholly owns two global product design and development subsidiaries, which are Intelligent Product Solutions and Kablooe Design. Featuring a wide range of smart technology solutions, ranging from Internet of Things to soft goods and even smart lighting and furniture products, Forward assists its enterprise-level clients to upgrade their offerings to meet rising consumer expectations.

And when I say Forward Industries has a wide range, I mean it. I’ve yet to find a company that has a diverse clientele like Forward, which includes telecommunications firms like Verizon (NYSE:VZ), pharmaceutical entities like Roche (OTCMKTS:RHHBY) and even privately held firearms manufacturer Sig Sauer. If you can find the common motif in these businesses, let me know.

What is clear is that Forward levers significant relevance, which is probably why many participants of meme stocks have clamored onto its shares. But if you truly want to know what I think, I’m going to bet that it’s because the equity unit appears to be forming a bullish pennant chart pattern, a development that initially started in the March doldrums of last year.

If you’re a big proponent of technical analysis, you might want to give Forward Industries a long look.

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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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ASX Small Cap Lunch Wrap: Who’s taking the money and running today?

Danish artist Jens Haaning was given US$84,000 by the Kunsten Museum of Modern Art in Aalborg to create a work … Read More
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Danish artist Jens Haaning was given US$84,000 by the Kunsten Museum of Modern Art in Aalborg to create a work of art.

But instead of using the cash to create the artwork, he instead returned two blank canvases which he renamed “Take the Money and Run”.

“Jens is known for his conceptual and activistic art with a humoristic touch. And he gave us that – but also a bit of a wake-up call as everyone now wonders where did the money go,” museum director Lasse Andersson said.

The contract states that the money is not Haaning’s and must be paid back when the exhibition closes on 16 January 2022.

Andersson said the museum would wait and see what Haaning does, but if he doesn’t return the money they will take the “necessary steps to ensure that Jens Haaning complies with his contract”.

 

To Markets …

The ASX 200 is down 123.10 points or 1.69% at midday today to 7,152.50.

In Europe a range of factors (cough cough Brexit) have sent gas and oil prices soaring.

“Energy prices are on the rise once again today, with Brent crude hitting the highest level in almost three years,” IG analyst Josh Mahony told Morningstar. “Supply constraints appear to be coming at the wrong time, with demand gradually picking up steam.”

In the US, oil prices rose as supply constraints continued to draw on inventories around the world and the rally in natural gas prices also pushed up crude, according to ANZ Research analysts.

But as traders booked profits on the recent rally, the Brent crude price fell 0.6% from 3-year highs to US$79.09 a barrel. And the US Nymex crude price fell by US16 cents or 0.2% to US$75.29 a barrel.

Copper and nickel fell by up to 2% and the gold futures price fell by US$14.50 an ounce or 0.8% to U$1,737.50 an ounce, with spot gold trading near US$1,733 an ounce.

Iron ore fell by US$6.30 a tonne or 5.3% to US$112.35 a tonne.

Investors are closely monitoring the outcomes of many high-stakes deadlines on Capitol Hill this week, setting up potentially chaotic negotiations against the backdrop of expiring government funding and the threat of a possible US default.

In testimony to the Senate, US Federal Reserve Chair, Jerome Powell, noted: “As reopening continues, bottlenecks, hiring difficulties, and other constraints could again prove to be greater and more enduring than anticipated, posing upside risks to inflation.”

“The sooner something there [Capitol Hill] happens, the happier the market will be,” said JJ Kinahan TD Ameritrade’s chief market strategist. “Watching the sausage being made is always a really ugly process.”

 

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for September 29 [intraday]:

Swipe or scroll to reveal full table. Click headings to sort:

Code Name Price % Change Market Cap
TVL Touch Ventures 0.56 40 $ 285,347,947.20
RDT Red Dirt Metals Ltd 0.845 34 $ 82,796,616.00
CLE Cyclone Metals 0.006 20 $ 23,896,184.91
DCX Discovex Res Ltd 0.006 20 $ 12,843,320.38
CAV Carnavale Resources 0.007 17 $ 14,581,381.82
SIQ Smartgrp Corporation 9.15 16 $ 1,049,639,954.94
WC8 Wildcat Resources 0.029 16 $ 12,937,500.00
OEL Otto Energy Limited 0.0115 15 $ 47,950,097.73
EVE EVE Investments Ltd 0.004 14 $ 13,450,996.62
NSX NSX Limited 0.11 13 $ 27,413,468.66
AFR African Energy Res 0.034 13 $ 20,601,318.90
CCZ Castillo Copper Ltd 0.036 13 $ 41,536,094.98
HCD Hydrocarbon Dynamic 0.018 13 $ 7,044,641.70
SBR Sabre Resources 0.0045 13 $ 6,732,254.60
MAY Melbana Energy Ltd 0.0245 11 $ 58,812,381.98
ALB Albion Resources 0.25 11 $ 6,962,979.38
LCT Living Cell Tech. 0.01 11 $ 5,142,968.83
LNY Laneway Res Ltd 0.005 11 $ 17,568,296.70
OEX Oilex Ltd 0.005 11 $ 25,597,936.60
MTC Metalstech Ltd 0.57 11 $ 85,005,894.85
CT1 Constellation Tech 0.011 10 $ 14,688,617.34
SHH Shree Minerals Ltd 0.011 10 $ 10,632,368.92
TSC Twenty Seven Co. Ltd 0.0055 10 $ 13,304,069.53

 

The biggest small cap winner was Touch Ventures (ASX:TVL), up 40% after listing on the ASX today, raising $100 million at 40 cents a share supported by Afterpay and the Huljich family.

Touch Ventures chairman Mike Jefferies said the ASX listing was a significant milestone for the company.

“A key investment objective for Touch Ventures is to deliver long-term absolute returns to shareholders, primarily from the capital appreciation of its portfolio,” he said.

“Our structure also enables us to provide access to venture capital investments to investors as a company listed on the ASX.”

The company has also completed its investment into Refundid – an instant returns platform for shoppers providing a full refund to consumers before their items are returned to the merchants.

The company invested $1 million to acquire a 10.4% equity interest (10.0% on a fully diluted basis) in Refundid and has agreed to provide a $1.0 million term loan facility to be used to fund customer refunds.

“We were impressed by Brad and the team at Refundid having already built an incredible product, clientele and brand in such a short time frame and are proud to be a part of their journey as they enter their next phase of growth,” TVL CEO Hein Vogel said.

Next up was Red Dirt Metals (ASX:RDT), up 34% on no news, followed by Cyclone Metals (ASX:CLE) andDiscovEX Resources (ASX:DCX). Both were up 20% on no news.

Up 17% was Carnavale Resources (ASX:CAV) off the back of its latest exploration update.

The WA gold explorer said its initial aircore drilling was complete at the Ora Banda South Project – with results expected in mid-November.

And salary packaging and fleet management provider SmartGroup Corporation (ASX:SIQ) rose 16% after getting a takeover offer from TPG Capital (the private equity group, not the telco) and Potentia Capital.

 

ASX SMALL CAP LOSERS

Code Name Price % Change Market Cap
CCE Carnegie Cln Energy 0.002 -33 $ 44,707,721.13
WOO Wooboard Tech Ltd 0.0015 -25 $ 7,644,325.48
MLS Metals Australia 0.002 -20 $ 10,567,970.12
YPB YPB Group Ltd 0.002 -20 $ 12,479,551.30
AIV Activex Limited 0.13 -19 $ 28,341,228.16
RMI Resource Mining Corp 0.025 -17 $ 9,776,822.46
RBR RBR Group Ltd 0.005 -17 $ 7,691,880.52
PGD Peregrine Gold 0.345 -16 $ 13,775,505.95
AUH Austchina Holdings 0.006 -14 $ 12,582,670.53
DDD 3D Resources Limited 0.003 -14 $ 13,581,302.32
EN1 Engage:Bdr Limited 0.0035 -13 $ 10,211,810.06
RNX Renegade Exploration 0.007 -13 $ 7,037,013.10
SUH Southern Hem Min 0.046 -12 $ 12,710,867.36
NAG Nagambie Resources 0.071 -11 $ 39,994,587.68
TKM Trek Metals Ltd 0.12 -11 $ 35,397,498.29
LSR Lodestar Minerals 0.008 -11 $ 11,618,436.13
AWN AWN Holdings Limited 0.76 -11 $ 33,660,170.00
CNJ Conico Ltd 0.043 -10 $ 48,010,313.95
AJQ Armour Energy Ltd 0.026 -10 $ 47,486,381.93
RLC Reedy Lagoon Corp. 0.026 -10 $ 15,660,758.81
MBK Metal Bank Ltd 0.009 -10 $ 11,890,683.04
SIH Sihayo Gold Limited 0.009 -10 $ 36,854,614.13

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Lefroy finds 6 anomalies at Burns, will kick off RC drilling next month

Special Report: Gold explorer Lefroy has identified six new magnetic anomalies, extending the Burns intrusive corridor to 3000m at its … Read More
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Gold explorer Lefroy has identified six new magnetic anomalies, extending the Burns intrusive corridor to 3000m at its Lefroy gold project near Kalgoorlie.

Burns has a distinctive, positive, aerial magnetic signature due to strong magnetite alteration of the porphyry and basalt rocks that host the mineralisation.

An aeromagnetic survey over the prospect identified the new anomalies, which have defined a corridor of dioritic intrusions – each of which are considered prospective for mineralisation.

Notably, the northwest trending corridor is over 3000m long and is coincident with a +200 parts per million drill hole copper anomaly based on resampling of wide spaced historical geochemical holes.

Lefroy Exploration (ASX:LEX) is focusing on the largest and northernmost magnetic anomaly – Lovejoy – which lies beneath Lake Randall and is adjacent to the strongest drill hole copper anomaly.

Multiple anomalies support a major structure at Burns

While the company has yet to establish the association between Burns and the diorite porphyry intrusions, it believes there’s a genetic relationship between them.

Lefroy also considers the copper and gold mineralisation hosted by both the diorite porphyry, basalt, and massive magnetite veins to be a new style of gold-copper-silver mineralisation in the area.

“The images from the new magnetic data further support our interpretation that the Burns prospect is one of a number of magnetic anomalies each centred on diorite porphyries considered prospective for gold-copper-silver mineralisation,” Lefroy managing director Wade Johnson said.

“These form a corridor of intrusives, likely along a major structure that potentially extends further to the northwest out to Neon.”

Pic: TMI RTP aeromagnetic image showing the full extent of the new aeromagnetic survey and the pronounced annular magnetic anomaly around the Burns Intrusion.

Lovejoy the priority target

The company says the magnetic anomalies provide strong rationale for an exploration program.

Planning is underway for an RC drilling program to begin in October, with drilling at Lake Randall – initially at the Lovejoy site – planned for November.

“We are very keen to commence RC drill testing of these magnetic anomalies, firstly on land then out on to Lake Randall, with Lovejoy the priority,” Johnson said.

“We have plenty of scope to demonstrate that what we have already discovered at Burns is part of a much larger mineral system, outboard of the larger Burns Intrusion that is also yet to be evaluated.”

 


 

 

This article was developed in collaboration with Lefroy Exploration Limited, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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REZ’s nickel hunt continues at East Menzies with more historic finds

Special Report: REZ’s East Menzies gold project is continuing to reveal its nickel prospectivity, with further research of old reports … Read More
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REZ’s East Menzies gold project is continuing to reveal its nickel prospectivity, with further research of old reports unearthing more significant intervals of nickel mineralisation from as close to just 1m from surface. 

Resources & Energy Group’s (ASX:REZ) ongoing nickel investigations at the Springfield and Cepline prospects, part of East Menzies project in WA, have uncovered peak assays from historic drilling of 12m at 1.22% nickel from 2m, 9m at 1.08% nickel from 1m and 7m at 1.46% nickel from 16m.

These intercepts, which were the result of aircore drilling by Pronto Resources in 2008 and rotary air blast drilling by Great Australian Resources (GAR) in 2004, also contained cobalt and zinc mineralisation.

It reads like an Indiana Jones or National Treasure script, REZ was drilling for gold at the Springfield prospect when it hit nickel.

The Richard Poole-led company then discovered some old CRA (now Rio Tinto) and BHP reports which showed the two mining heavyweights had found nickel as far back as the late 60s but weren’t interested in it because they only wanted gold.

Over five decades later, nickel is all the rage thanks to the energy transition and the base metal’s importance in batteries.

“Significantly, the bottom of hole assays for the GAR drillholes terminated in bedrock zones with high nickel content.” – Executive Director Richard Poole  

These results included 15m at 0.13% nickel and 14m at 0.06% nickel, both from 82m depth.

“This further research by REZ has identified additional mineral exploration results at the

Cepline prospect which support the initial findings of nickel mineralisation by BHP in 1986.” – Executive Director Richard Poole   

Nickel holy grail

Now, Richard Poole says these additional results support the view that the ultramafic rocks along the Springfield side of the East Menzies project are prospective for nickel sulphides.

Nickel resources are usually divided between laterite or sulphide deposits.

Sulphides are the holy grail for explorers because they are easier and cheaper to process. This is also what makes nickel sulphides the preferred choice of electric vehicle battery makers.

BHP back in 1986 reported significantly high values of nickel, with a peak grade of 2.9%, and as close to surface as just 6m.

This was at the Cepline prospect in the Springfield Venn zone, some 800m north of the REZ’s recent scout drilling program.

Borehole location plan showing geology and intervals of sulphide mineralisation

Nearly 20 years earlier, CRA reported surface rock samples grading 0.95% to 1.43%, and drill results of 10ft at 1.49% from 55ft and 15ft at 0.77% from 170ft.

Sydney-based REZ is undertaking further research towards developing a suitable exploration program to investigate the mineral bearing potential of the area.

Resources & Energy Group (ASX:REZ) share price chart

 


 

 

This article was developed in collaboration with Resources & Energy Group, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post REZ’s nickel hunt continues at East Menzies with more historic finds appeared first on Stockhead.

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