Companies with reasonable fundamentals that are in the radar of retail investors for some quick gains
With increased participation from retail investors, there needs to be adjustments to the portfolio and investment strategy. Without doubt, focus on value stocks and fundamentally sound growth stocks will continue to deliver returns. However, I would be tempted to allocate some funds to meme stocks. This column will talk about the best Robinhood stocks to buy to get into the meme game.
My stock selection has been inclined towards companies that have reasonable fundamentals. Furthermore, most of these companies have been working on some kind of business transformation. This is likely to keep the markets interested. Few positive news can result in a major rally.
Let’s also come back to the point on focusing on meme stocks. Investment strategy needs to be dynamic in the current environment. Just for 2021, AMC Entertainment (NYSE:AMC) has delivered over 2,200% returns. Irrespective of company fundamentals, I would not mind being in this game.
With all of that in mind, below are seven of the best Robinhood stocks to buy. It would not be a surprise if a few of these names deliver multi-fold returns. But at the same time, it’s advisable not to go overboard on these stocks. So when pursuing a high-risk investment, position sizing is critical.
- Sundial Growers (NASDAQ:SNDL)
- Naked Brand Group (NASDAQ:NAKD)
- Genius Brands (NASDAQ:GNUS)
- BlackBerry (NYSE:BB)
- Ideanomics (NASDAQ:IDEX)
- Nokia (NYSE:NOK)
- Corsair Gaming (NASDAQ:CRSR)
That said, let’s dive in and take a closer look at each of these stocks.
Best Robinhood Stocks to Buy: Sundial Growers (SNDL)
SNDL stock has witnessed some wild swings in the last 12-months. From lows of 14 cents, the stock skyrocketed to $3.96 by February 2021. Profit booking coupled with a significant equity dilution resulted in a sharp correction. The stock currently trades at just under $1 per share.
With a series of equity offerings, Sundial currently has $873 million in cash. In addition, the company also had $33.6 million in marketable securities. This gives the company ample financial flexibility for acquisitions and investment in organic growth. In May 2021, the company announced the acquisition of Inner Spirit Holdings and Spirit Leaf Retail cannabis network.
Furthermore, Sundial also formed a joint venture with SAF Group. The move will seek to invest in the global cannabis market in debt, equity and hybrid instruments. Few attractive investments and acquisitions can translate into another rally for SNDL stock.
At the same time, the company also has several premium brands with a focus on inhalables. With higher marketing and selling expenses, it’s likely that sales growth will accelerate. Overall, SNDL stock is among the best Robinhood stocks to buy to get into the meme game.
Naked Brand Group (NAKD)
NAKD stock is also among the top meme stocks that investors can buy on Robinhood. From levels of 7 cents in November 2020, NAKD stock surged to $3.40 towards the beginning of the year.
Like most penny stocks, Naked Brand utilized this rally to mop-up funds from the markets. With equity dilution, the stock is back to around 70 cents. However, as of March 2021, Naked Brands reported a cash position of $270 million with no debt in the balance sheet. Therefore, the company is well-positioned to invest in the business transformation plan.
As an overview, the company is in the business of intimate apparels. In January 2021, the company announced a business transformation plan with sole focus on the e-commerce model. The company expects divestiture of its Bendon brick-and-mortar operations by the second quarter of 2021.
With ample cash buffer, Naked Brands is also looking at acquisitions. The pandemic has accelerated growth in online retail and Naked Brands is likely to benefit. On the flip side, the intimate wear market is already competitive and it remains to be seen if the company’s plans translate into strong top-line growth.
Best Robinhood Stocks to Buy: Genius Brands (GNUS)
GNUS stock is among the best Robinhood stocks to buy to get into the meme game. Short squeeze has resulted in powerful rallies for several penny stocks in the last few months. With a short interest that’s at 16% of the free float, GNUS stock looks primed for a short squeeze. I would however refrain from holding any long-term position in the stock.
As an overview, Genius Brands is a kids media company. Genius is involved in producing, marketing and licensing of children entertainment content. As of March 2021, the company reported cash and equivalents of $143.6 million with no debt. This provides the company with ample cash for content creation.
Recently, the company announced that 240 hours of content will be coming to the platform. This can result in revenue upside in the coming quarters. However, it’s worth noting that Genius Brands does not derive revenue from subscription fee. The company’s revenue source is advertising and merchandise licensing. Even with some ambitious growth plans related to new content, business scalability remains a concern.
Genius Brands is also looking at acquisitions to boost growth. This is another possible reason for a sharp movement in GNUS stock. In the last month, the stock has moved higher by 37%. With positive new flow and the possibility of a short squeeze, some short-term position can be initiated.
As the meme stocks mania continues, BB stock is worth holding for some speculative upside. The stock is already higher by 157% in the past year, but has corrected by 32% from 2021 highs of $28.77. A renewed rally seems likely as meme stock euphoria continues.
In terms of business developments, Blackberry is focused on electric vehicle (EV) technology — and that can be a potential game changer. In Q4 2021, the company partnered with Baidu (NASDAQ:BIDU) for next generation autonomous driving technology. Additionally, BlackBerry’s QNX has design wins with 23 of the world’s top 25 Electric Vehicle OEMs. Blackberry QNX is already being used in 175 million vehicles globally.
Cybersecurity is another area where the company has been investing. The company already has a portfolio of eight products in this segment. For FY2021, the company reported revenue of $893 million. However, operating cash flows were relatively low at $82 million. Blackberry does have a total liquidity buffer of $804 million. This will allow the company to invest in innovation.
Overall, Blackberry does have some healthy business developments. Some exposure for the long-term can be considered. For now, the stock can surge if business developments remain positive coupled with interest from the meme stock army.
Best Robinhood Stocks to Buy: Ideanomics (IDEX)
Anything related to EVs has attracted investor attention. IDEX stock is no exception with the company offering services to facilitate adoption of EVs by commercial fleet operators. This includes charging-as-a-service and vehicle-as-a-service.
More recently, Ideanomics seems to be in an acquisition spree. The company acquired U.S. electric vehicle tractor maker, Solectrac. The company believes that the global agricultural tractor market is worth $75 billion globally. With rising adoption of EVs, there is a big market opportunity.
In May 2021, the company also announced the acquisition of US Hybrid. The latter is a manufacturer of electric powertrain components and fuel cell engines for medium and heavy-duty commercial fleet applications.
Amother other noteworthy investments, the company has 51% stake in Treeletrik, which is an electric scooter manufacturer in Malaysia. For Q1 2021, Ideanomics reported cash and equivalents of $356 million. This provides the company with ample flexibility to further pursue attractive acquisitions.
In the recent past, IDEX stock has been in a tight trading range. A break-out on the upside seems imminent. The stock can also be a possibly short squeeze candidate.
NOK stock would also feature in my list of best Robinhood stocks to buy. I further believe that NOK stock is more than just a meme stock. If positive business developments sustain, the upside can be in multi-folds.
For Q1 2021, the company reported 9% sales growth year-over-year (YOY) to 5.1 billion euros. Nokia already has 160 commercial deals and 63 live 5G network deployments. In the coming years, 5G will serve as a key growth driver.
Nokia has also guided for an operating margin in the range of 7% to 10% for the year. If margins remain robust, the company’s cash position is likely to get a further boost. For Q1 2021, operating margin was 10.9%.
As of Q1 2021, Nokia reported 8.8 billion euros in cash and equivalents. This gives the company ample flexibility to invest in innovation. Nokia believes that the total addressable market for mobile network, network infrastructure and cloud network services is 110 billion euros. Therefore, there is ample scope for revenue upside from current levels.
In terms of stock price action, NOK stock had touched a high of $9.80 in January 2021. The stock currently trades at $5.50. I would not be surprised if the stock re-visits highs in the next few quarters.
Best Robinhood Stocks to Buy: Corsair Gaming (CRSR)
Gaming stocks have been among the favorites when it comes to meme stocks. CRSR stock looks attractive after an extended period of consolidation.
Corsair Gaming is in the business of designing, marketing and distribution of gaming and streaming peripherals. The company has been on a high-growth trajectory. For Q1 2021, Corsair reported revenue growth of 71.6% YOY to $529.4 million.
In the last 12-months, the company has launched 84 new products and acquired three companies. This is the key reason for robust growth. Clearly, CRSR is more than just a meme stock, but the stock has attracted attention of Reddit groups like wallstreetbets.
From a stock upside perspective, another major positive is the company’s improvement in EBITDA margin. For Q1 2021, the company reported an EBITDA margin of 15.2%, which was higher by 640 basis points YOY.
Even for the full year, the company has guided for EBITDA of $255 million on total revenue of $2.0 billion (mid-range). This would imply an EBITDA margin off 12.8%. As operating cash flow accelerates along with higher margin, the stock is likely to remain in an uptrend.
Note: This article originally appeared at InvestorPlace.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.