In the world of investing, “meme stocks” emerged as a buzzword during the pandemic, signifying the power of retail investors to drive stock prices to unprecedented heights through social media fervor.
While many meme stocks have been synonymous with volatility and risk, a handful are proving to be solid long-term picks.
Let’s delve into three such stocks that are capturing investor attention with their potential for sustained growth.
Carnival: A Sea of Recovery
Carnival Corporation (CCL, CUK), the global cruise operator, found itself in troubled waters in 2020 as the pandemic forced a halt in its operations. Yet, the company’s remarkable journey from adversity to recovery has caught the eye of investors. After a 74% share price drop in early 2021, Carnival made a remarkable turnaround with a 132% rise in a few short months.
The ship seems to be sailing on a course of recovery, evident from its record bookings for consecutive quarters. Q2 2023 sales hit a high note at $4.9 billion, exceeding pre-pandemic levels. Carnival’s prudent management of its massive debt load, combined with its strong liquidity of over $7 billion, positions the company for sustainable growth. Share buybacks and strategic attention to shareholder concerns have also contributed to its resurgence.
Lemonade: Disrupting Insurance with AI
Lemonade (LMND), an insurance company harnessing the power of artificial intelligence, has shaken up the insurance landscape. While scaling up led to initial losses, the company’s strategic vision is paying off. Despite periodic fluctuations in its loss ratio, Lemonade is focused on achieving long-term financial stability. Notably, its loss ratio improved to 86% in Q1 but edged up to 94% in Q2. Management attributes these fluctuations to the gradual process of optimizing newer products.
The stock’s roller-coaster ride, soaring over 220% from lows in October 2020 only to fall sharply thereafter, underscores the market’s cautious approach. Yet, the fundamentals remain robust, indicating potential rewards for patient investors who believe in the company’s AI-driven insurance disruption.
SoFi Technologies: Pioneering Financial Services
SoFi Technologies (SOFI) has set itself apart in the financial-services arena with a focus on a younger demographic and a user-centric approach. With easy-to-use tools, low fees, and a wide range of services, SoFi is attracting a growing customer base. In Q3, the company achieved an impressive 37% growth in revenue and added 584,000 customers.
A highlight of SoFi’s strategy is its push towards profitability. Management’s projection of achieving net profitability by the end of 2023 has garnered attention. Despite its stock’s initial surge of nearly 190% after going public, it has since experienced a decline of 79%. The current price-to-sales ratio of 2.6 signifies potential, making SoFi an intriguing prospect for investors eyeing long-term growth.
Long-Term Horizons for Meme Stock Investors
While the term “meme stocks” may have been associated with speculative trading, these three companies demonstrate that there can be substance beyond the hype.
Carnival’s recovery journey, Lemonade’s AI-powered insurance disruption, and SoFi’s consumer-centric financial services are emblematic of the diverse opportunities within the meme stock realm.
As with any investment, a long-term perspective and diligent research remain essential to navigating these potential gems in the volatile market landscape.
