Popularity on social media platforms like Reddit and Twitter, high short interest, and retail trader-driven short squeezes characterize most meme stocks. And while the hype surrounding some famous names has begun to fade, some new names are now making quite a buzz on the subreddit WallStreetBets (WSB).
Although the most popular meme stock GameStop Corporation (GME) is up 801.3% year-to-date, the company’s unstable financials and bleak growth potential may lead to a price pullback in the near term. In its last reported quarter, GME’s operating loss came in at $58 million and its net loss amounted to $61.6 million. Furthermore, analysts expect its EPS to decline 20.9% in the next quarter. The stock has declined 10.7% in price over the past month.
Therefore, we think fundamentally sound stocks Apple Inc. (AAPL), Sirius XM Holdings Inc. (SIRI), and Goodrich Petroleum Corporation (GDP), which are being discussed heavily on subreddit WSB, could be better choices than GME for meme investors.
Apple Inc. (AAPL)
APPL in Cupertino, Calif., one of the largest manufacturers and suppliers of consumer electronics. The company’s innovative edge and brand value have allowed it to enjoy strong growth over the years.
This month, AAPL launched two powerful chips–M1Pro and M1Max. These new chips are expected to transform systems into pro-system with incredible performances, custom technologies, and industry-leading power efficiency. M1Pro and M1Max also include an Apple-designed media engine that should accelerate video processing while maximizing battery life.
AAPL’s total net sales increased 36.4% year-over-year to $81.43 billion for its third fiscal quarter, ended June 26, 2021. The company’s gross margin grew 55.4% from its year-ago value to $35.26 billion. Its operating income rose 84.3% from the prior-year quarter to $24.13 billion. Also, the company’s net income increased 93.2% year-over-year to $21.74 billion.
AAPL’s revenue for its fiscal year 2021 is expected to increase 33.4% year-over-year to $366.24 billion. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to increase 70.7% in the current year. AAPL’s stock has advanced 28.5% in price over the past year.
AAPL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Sentiment, and a B grade for Quality. We’ve also graded AAPL for Value, Momentum, Stability, and Growth. Click here to access all AAPL’s ratings. AAPL is ranked #19 of 50 stocks in the B-rated Technology – Hardware industry.
Sirius XM Holdings Inc. (SIRI)
New York City-based SIRI is an audio entertainment company that offers programming and content across the company’s subscription- and digital-advertising-supported audio platforms. The company operates two audio entertainment segments: Sirius XM and Pandora. Also, its service is distributed through its two satellite radio systems, and its platforms collectively reach more than 150 million listeners across all categories of digital audio.
This month, one of SIRI’s subsidiaries, Sirius XM Radio Inc., entered a new creative programming and strategic agreement with Audio Up, a podcast and audio entertainment production studio. The agreement should give SIRI an exclusive “first-look” co-production option for new Audio Up original podcast concepts and provide options for distribution across its properties, exclusive rights to manage and sell advertising inventory, and sponsorship in connection with any podcast produced for SIRI through its SXM Media combined sales organization.
For the second quarter, ended June 30, 2021, SIRI’s total revenue increased 15.2% year-over-year to $2.16 billion. The company’s operating income grew 58.6% from its year-ago value to $658 million. Its net income rose 78.2% from the prior-year quarter to $433 million. Also, the company’s EPS increased 100% year-over-year to $0.1.
Analysts expect SIRI’s revenue to increase 6.9% year-over-year to $8.59 billion in its fiscal year 2021. Furthermore, its EPS is expected to grow 16% in the current year. Over the past nine months, the stock has climbed 1.7% in price.
SIRI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Stability, Momentum, and Quality.
In addition to the POWR Rating grades I’ve just highlighted, one can see SIRI’s ratings for, Value, Growth, and Sentiment here. SIRI is ranked #2 of 6 stocks in the A-rated Entertainment – Radio industry.
Goodrich Petroleum Corporation (GDP)
GDP in Houston, Tex., is an independent producer and developer of natural gas and crude oil. It holds interests primarily in the Haynesville Shale Trend, Tuscaloosa Marine Shale Trend, and the Eagle Ford Shale Trend. In addition, the company owns interests in 189 producing oil and natural gas wells located in 37 fields in six states of the United States.
Last month, GDP acquired eight wells in the core of the Haynesville Shale basin in Caddo and Bossier Parishes, Louisiana, for $1.5 million. These eight wells produce approximately 2,000 Mcfe per day and approximately 5,800 gross (4,500 net) acres. With this acquisition, the company now has some 32,000 net acres in the core of the play.
During the second quarter, ended June 30, 2021, GDP’s operating income came in at $13.02 million, versus a $19.55 million operating loss in the prior-year quarter. The company’s net loss decreased 49.6% year-over-year to $11.56 million. Its adjusted EPS amounted to $0.64 for the quarter, compared to a $1.11 adjusted loss per share in the second quarter of 2020. Also, the company’s cash and cash equivalents came in at $782 million during the period.
For its fiscal year 2021, analysts expect GDP’s revenue to increase 78.8% year-over-year to $167.8 million. The company’s EPS is estimated to increase 1,861.9% in the current year. The stock has gained 110.7% in price over the past six months.
It’s no surprise that GDP has an overall B rating, equating to a Buy in our POWR Rating system. Also, GDP has an A grade for Momentum, and a B grade for Growth and Sentiment in our POWR Rating System. Click here to see the additional POWR Ratings for GDP (Value, Stability, and Quality). In the Energy – Oil & Gas industry, GDP is ranked #13 of 89 stocks.
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AAPL shares were trading at $148.86 per share on Monday afternoon, up $0.17 (+0.11%). Year-to-date, AAPL has gained 12.71%, versus a 22.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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