I believe that the meme stock rallies we’ve seen play out in recent years aren’t likely to become commonplace. Therefore, finding the next big meme stock isn’t necessarily easy.
The sorts of short squeezes and parabolic moves that have proliferated really defied the rules of theoretical finance. Seeing some of these rallies play out, by the shares of companies with dubious fundamentals, has been remarkable.
That said, it’s clear that certain stocks have gained a cult-like following on social media channels. The trading volume of these stocks has been huge, largely due to retail investors who are looking for quick wins. Whether as a result of stock purchases or options bets, meme stocks have rallied impressively on heavy volumes over the past year.
For those looking for the next big meme stock, there are certain stocks worth watching. Here are three top meme stocks I think are worthy of being kept on watchs list right now, even for investors who don’t necessarily want to step into the fray now.
GameStop (NYSE:GME) is the preeminent meme stock.
The incredible surge of GME stock last year, which took its shares from around $4 in mid-2020 to more than $480 per share in January 2021, was one of the most incredible near-term short squeezes I’ve ever seen. Indeed, GameStop’s parabolic surge really was something to behold.
But the video game retailer’s business is certainly declining. The surge of its stock wasn’t caused by any real changes in its underlying business. Rather, speculation and a stampede by retail investors resulted in a tremendous rally by GME stock which was unexpected by most.
Although GameStop’s core business has been weak,. all indications are that the GME fan base remains as strong as ever. Accordingly, for speculators looking for a top-tier meme stock on which to speculate, GameStop remains the king right now.
One of the more interesting meme stocks during last year’s rally was Nokia (NYSE:NOK).
This company’s status as a 5G provider does give investors reason to be upbeat about its growth outlook. However, it was Nokia’s following on forums such as Reddit’s WallStreetBets which really galvanized many investors to pile into this name.
Like GameStop, NOK stock jumped by an incredible amount in early 2021. Many retailer investors became interested in Nokia because of the high number of its shares that were being sold short by institutional investors and hedge funds.
While the number of NOK shares sold short has fallen substantially, many meme-stock investors are still interested in the firm . If many institutional investors short Nokia again, NOK will certainly be a stock to keep an eye on.
A stock that many may not necessarily be included in many lists of meme stocks is Microsoft (NASDAQ:MSFT). Indeed, MSFT is, generally-speaking, too large to be called a meme stock.
That said, the number of retail investors who are interested in Microsoft and other mega-cap stocks is likely to increase meaningfully. That’s because, as stocks’ valuations come down, the share prices of many companies, including Microsoft, have fallen meaningfully, making these names more attractive to many retail investors.
Microsoft’s sales climbed 13% year-over-year last quarter. That was very impressive growth, given the company’s size.
As a result of these factors, my view is that, as retail investors become less speculative, MSFT stock may appeal to many more meme investors. If Microsoft’s valuation declines further, I expect more retail investors to buy MSFT stock
In any case, I’d certainly recommend considering buying MSFT stock now . I’ve been interested in the shares for some time, and I may pull the trigger on it soon.
On the date of publication, Chris MacDonald 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.