Things haven’t ended well for the Reddit users and Robinhood traders who got in late on GameStop (GME), AMC Entertainment (AMC) and BlackBerry (BB) (among others) short squeezes. Those stocks are down an average of 40% from their very-short-lived late-January peaks. But there are a number of Reddit stocks that look like they might have staying power.
GME and AMC still top the list of “trending stocks” on Reddit’s Wall Street Bets page. Unless you bought those stocks in a very specific window (basically the last week of January), you probably lost money on them. But other stocks that appear on the “trending” thread are not only still performing well now, but have been for quite some time.
The following five stocks all made the top 20 on the Wall Street Bets trending page. All of them are either at new highs, trading within a reasonable range, or trading well above their 200-day moving averages. And all of them have posted market-beating returns in the past 12 months.
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Here are five Reddit stocks that look well positioned for the long haul, in descending order of one-year returns:
5 Reddit Stocks with a Shelf Life
Reddit Stock #1: Digital Turbine (APPS): 1,992%
Millennials love apps, so why not invest in a stock with the same ticker symbol?! In reality, Reddit users’ fascination with APPS goes much deeper than that, and with good reason: the company provides apps for mobile phones and is, in fact, the only company imbedded in the Android operating system to allow for app downloading. With 6,000 apps being added per day to the Android platform, that’s an enormous – and growing – customer base, with big-name clients such as Netflix and Amazon.
With earnings expected to more than triple this year, and sales expected to more than double, there’s a whole lot to like about Digital Turbine. The valuation is high (forward P/E of 96), and the stock has become super volatile of late, with a beta of 2.5, but you can’t argue with the chart over the last year.
Reddit Stock #2: Dycom Industries (DY): 435%
Dycom supplies skilled workers for the telecommunications service provider industry. The sales growth is modest (1.4% expected this year), but the earnings growth is enticing (16.8% estimated). And obviously the returns have been quite impressive over the past year, with the stock stair-stepping higher for some time. Still, it’s unclear why Reddit users are so infatuated with this small-cap stock; it’s seventh on the Wall Street Bets list of trending stocks.
First Majestic Silver Corp (AG): 208%
Silver stocks and ETFs have attracted the Reddit crowd’s wandering eye of late, none more so than this Mexican-based silver miner, which currently ranks sixth on the site’s list of trending stocks. Most of the stock’s gains in the last year came during the mad rush in late January, as AG peaked at 22 before crashing to 16 in the first week of February. It’s been up and down since, but is now just under 17. I’d wait for this one to stabilize before attempting to buy.
Palantir Technologies (PLTR): 160%
Big data is big business these days, and Palantir is a software company that specializes in big data analytics. It’s growing like a weed: sales are expected to expand 35% this year, and earnings per share are expected to rise a whopping 700% (from 2 cents to 16 cents). PLTR came public in late September and is up 160% since despite a big pullback in February. Having built a base for most of the last month, a breakout to the upside could be forthcoming if growth stocks continue to get their act together.
But as a recent IPO in a high-growth, tech-based industry, it’s easy to see why Palantir appeals to the Reddit crowd.
MSC Industrial Direct (MSM): 71%
MSC is one of the largest industrial equipment distributors in the U.S., providing metalworking and other tools. With the Biden administration making improving America’s infrastructure one of its primary objectives, it’s no coincidence most of MSM’s gains have come since the November election. Just down from 52-week highs, and with only modest volatility (1.06 beta), MSM looks buyable right here.
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!