Generally speaking, one doesn't want to get their stock picks from random people posting funny, picture-based thoughts about companies on the internet. While these can be amusing at times -- and even thought-provoking -- they're also often misguided or even misleading. But every now and then, those who post and repost the web's best memes correctly identify a top investment prospect, even if they don't realize they've done so.
That doesn't necessarily mean their picks are easy names to own. Indeed, most meme stocks are already volatile, made even more unpredictable by the circulation of a good meme itself. If you can patiently handle the wild ride though, these picks can be worth the wait.
Here's a closer look at three hot meme stocks that actually make good sense as long-term picks.
Image source: Getty Images.
1. Tesla
Admittedly, most of the internet's recent memes involving Tesla (TSLA 12.06%) are more about its CEO and founder Elon Musk than they are about the electric car company itself. That's especially true in the wake of his successful attempt to acquire social media platform Twitter, which has repolarized plenty of people. In that Musk and Tesla are so closely entwined though, a meme about the man is in effect a meme about the electric vehicle manufacturer, which still dominates the U.S. EV market, by the way, and is still outselling any other maker's electric car on a worldwide basis.
Competition is finally starting to make a dent in Tesla's share, mind you, both here and abroad. It may not really matter, though, as there's apt to be more than enough business to go around.
A forecast from the U.S. Energy Information Administration (EIA) puts things in perspective. Though there are only about 10 million EVs on the world's roads right now, the EIA anticipates this number will swell to 672 million by 2050. For perspective, Tesla made a little less than 1 million vehicles last year. Even if the company only captures a modest share of the industry's growth, that's still an opportunity to sell a lot more electric vehicles than it's selling now.
Of course, being the most recognized name in the business certainly suggests it will at least win its fair share of the EV market's growth.
2. BlackBerry
Yes, the original smartphone company is still around, though it's no longer making smartphones. Rather, BlackBerry Limited (BB -0.69%) has licensed its brand name to select manufacturers that want to make these specialized handhelds so it can focus solely on software.
Namely, BlackBerry offers mobile cybersecurity solutions, assists in the optimization of the Internet of Things, and helps enterprise-level customers handle events like IT outages and cyberattacks. It's also the name behind the QNX platform found in a couple of hundred million cars, which helps drivers navigate the roads they're traveling.
It's a tough business, made even tougher by the pandemic. BlackBerry Limited's top line tumbled 20% last year, leading the company to what was essentially a breakeven. That performance extends a long-standing streak of just so-so bottom lines that were as apt to be in the red as in the black. This year and next year aren't expected to be meaningfully better on the fiscal front either.
All that said, BlackBerry's business lines are a viable long-term opportunity. Demand for secure mobile connections is only going to grow now that 5G connectivity is here, yet the advent of that growth is only going to invite more cybercrime aimed at exploiting those wireless connections. ABI Research estimates that 5G cybersecurity alone will be an $11 billion market by 2026, while automotive/connected-car cybersecurity will be worth nearly $9 billion by 2027, according to numbers from Emergen Research. Either figure alone is way more business than BlackBerry is doing now.
3. DoorDash
Finally, add DoorDash (DASH -2.01%) to your list of meme stocks that could actually end up being rather rewarding holdings for buy-and-hold investors.
If you didn't know it was a publicly traded company, you're not alone. DoorDash went public in December 2020, when the COVID-19 pandemic was raging and we were just moving past a contentious presidential election. Plenty of critics were also convinced the company was only going public to cash in on the IPO craze underway at the time, and while demand for meals delivered to consumers' doors was at its highest. Both manias felt vulnerable to time.
And in some ways, the skeptics were right. Although they soared out of the gate, DoorDash shares ultimately fell more than 70% from their post-IPO peak, reaching new record lows just last week.
The funny thing is, while DoorDash still has a lot of refinement of its model to work out, consumers are still liking the convenience of at-your-door deliveries, despite the effective, slow-grinding end of the pandemic. Revenue for the three-month stretch ending in March was up 35% year over year, kicking off a year analysts believe will see top-line growth of 21% followed by a 24% revenue improvement next year.
That still won't be enough to push the company to profitability. But it should be enough to cut DoorDash's projected 2022 loss in more than half in 2023, making profits in 2024 a distinct possibility. The market may reward the stock for progress toward that end zone in the meantime, now that it sees there's a sustainable market for quick at-home deliveries of all sorts of goods, including nonfood items.
