The meme stock season seems to be back. Novavax (NASDAQ:NVAX) has surged over 200% in the last month, with big gains coming in a few trading days. GameStop (NYSE:GME) stock has also skyrocketed more than 290% in the last month. These are just two examples and speak volumes about the ferocity of the rally. Of course, I would not look at these overbought ideas, but I would certainly consider some meme stocks to buy if there is a broad market correction.
An important point to note is that GDP growth in the U.S. has decelerated in Q1 2024. There are reasons for the market to feed nervous if the first-rate cut is delayed — there could be a deep price correction.
However, any such correction would be a good opportunity to buy meme stocks. Rate cuts are inevitable, and easy money policies tend to support speculative activity across asset classes. So, I believe a bigger meme stock rally might be on the cards a few quarters down the line. Let’s discuss the meme stocks to buy for stellar returns.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) stock has been subdued in the last 12 months. However, the meme stock looks attractive at a forward price-earnings ratio of 22. I expect a big breakout on the upside in the coming quarters on the back of positive business developments.
The first point to note is that Riot ended Q1 2024 with a cash buffer (including Bitcoin (BTC-USD) holdings) of $1.3 billion. Further, with a zero-debt balance sheet, the company has high financial flexibility to pursue aggressive growth.
It’s also worth noting that the company has set an ambitious target of increasing hash rate capacity from 12.4 EH/s in Q1 2024 to 31.5 EH/s by the end of the year. If Bitcoin remains in an uptrend, this expansion will translate into stellar revenue and EBITDA growth.
I must add that Riot plans to increase capacity to 100 EH/s by 2027. With these positives, it’s surprising the RIOT stock has remained sideways. It’s a golden opportunity to accumulate before the stock skyrockets.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) stock has witnessed a rally of around 50% from 52-week lows. However, PLUG stock has plunged in the last few quarters and remains attractive even after the recent rally. If the stock is depressed due to broad market sentiments, it would be a good opportunity to accumulate.
The company also has a big new catalyst likely to drive the stock higher. The company recently announced a commitment by the U.S. Department of Energy for a conditional loan of $1.66 billion. PLUG would utilize the loan to “finance the development, construction and ownership of up to six green hydrogen production facilities.”
While Plug Power had ambitious expansion plans, funding and execution were the main challenges. The commitment from the U.S. DoE is likely to alleviate the concerns. However, I would still look at PLUG stock as a trading bet rather than an investment opportunity. Blue-chip companies are making big investments in the hydrogen economy. I prefer to stick to those ideas from a long-term investment perspective.
Tilray Brands (TLRY)
I would like to remind investors that Tilray Brands (NASDAQ:TLRY) stock was trading below $5 at the beginning of October 2020. When Biden assumed power, TLRY stock skyrocketed above $60 in February 2021. With the presidential election around the corner and cannabis likely to be a hot topic of discussion, I would hold TLRY stock.
From a business perspective, Tilray focused on diversification last year. Backed by acquisitions, the Tilray is the fifth largest craft beer manufacturer in the United States. Presence in the U.S. also provides a strong strategic infrastructure for aggressive expansion in the scenario of federal-level legalization of cannabis.
Even in the cannabis segment, Tilray has been reporting healthy growth. For Q3 2024, global cannabis net revenue increased by 33% on a year-on-year basis. With Tilray having a presence in the medicinal and recreational cannabis business, the addressable market is significant. Therefore, I expect healthy growth to sustain, coupled with gradual EBITDA margin expansion.
On the date of publication, Faisal Humayun did not hold (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.