3 meme actions that could make you rich
So far, 2021 has been the year of memes stock. Retail investors have used their collective power to help generate incredible gains for struggling businesses, including AMC Entertainment Holdings and GameStop, and some people who caught those unlikely winners at the right time have enjoyed life-changing wins.
Investing in meme stocks is a risky business, but we probably haven’t seen the last of this year’s explosive underdog successes – and it may be worth considering if approached with the right expectations. With that in mind, three Motley Fool contributors identified a trio of companies that could beat the odds and deliver incredible performance. Read on to see why they think these memes stocks could generate huge returns for your portfolio.
Sprott Physical Silver Trust
Keith Noonan: Sprott Physical Silver Trust (NYSEMKT: PSLV) is a fund that holds physical cash deliverable to stakeholders, and it has an outside chance to tap into the memes magic that fueled some of this year’s biggest winners.
It might seem odd to think of a fund that holds money as an explosive meme stock candidate. Money is often viewed as a somewhat boring investment vehicle, valued for its potential defensive characteristics in a stock market crisis or economic crash, but it is unlikely to make you rich anytime soon. However, there is a short-squeeze-style thesis that posits that the price of silver could rise dramatically in the not-so-distant future, and that may not be as crazy as it sounds.
The money squeeze thesis argues that silver prices are kept artificially low through trading in a derivative called “paper money”. The amount of paper money traded far exceeds the amount of physical money that could be delivered at any one time, and traders can use these derivatives to take short positions against silver. Those with short positions might be forced to hedge if silver prices start to rise rapidly, leading to further price gains.
As with the popular WallStreetBets forum on Reddit which has been credited with fueling the rise of many memes stocks, money buffs have their own gathering place on the popular chat site – aptly dubbed “WallStreetSilver”. With significant inflation issues still looming, the prices of many commodities rising dramatically, and a co-ordinated group of money-lovers continuing to attract new members, it is possible that the money is going strong. performance over the next year and beyond.
Am I all-in on the silver thesis? Not really. The conditions and mechanisms involved make this unlikely. But it’s been a year since the implausible became reality on many investment fronts, and crazier things have happened. I bought PSLV shares for my retirement account last month. If the money never materializes, well. It is far from the worst thing to have exposure to precious metals in this account. If the squeeze hits, however, I might end up retiring earlier than expected.
Jamal Carnette: Unlike other actions of memes, Blackberry (NYSE: BB) has a viable recovery plan. CEO John Chen has gone beyond the smartphone target and pivoted the company towards enterprise cybersecurity and automotive applications. While that transition has been largely lost for Wall Street analysts and retail investors, intrepid investors on Reddit have a better understanding of the story of the turnaround.
Granted, business model transitions are tough, but if anyone can be successful it’s Chen. The BlackBerry executive solidified his reputation as a turnaround specialist with Sybase, taking the company from the brink of failure to the lucrative acquisition of German software giant SAP.
Chen’s plans are to leverage BlackBerry’s reputation for privacy and encryption into a larger suite of cybersecurity software and services rebranded as Spark. Recent ransomware hacks like the Colonial Pipeline have caught the attention of the White House. The increased spending is expected to allow Spark to improve his fortunes even without being a market leader in this industry.
Even stock traders seem more interested in Chen’s auto efforts, for good reason. Earlier this year, the Big Three automakers all warned that a chip shortage was threatening vehicle production. This makes sense when you consider that cars are now mobile computing devices with mobile driver assistance and entertainment systems.
This is BlackBerry’s opportunity: its QNX operating software is built into 175 million vehicles and this is likely to only increase as autonomous driving technology becomes mainstream. However, Chen does not wait for this day and has been aggressive in signing new deals to shape the nascent industry, such as the recently announced partnership with Amazon AWS nicknamed IVY.
Finally, investors do not have to worry about excessive issuance of shares that dilutes their stake in favor of short sellers. Chen’s compensation is strongly tied to the price of the underlying stock and if BlackBerry shares exceed $ 30 by November 3, 2023, he is pending a bonus of $ 90 million.
While there are legitimate reasons why stock price triggers are not ideal for executive compensation – BlackBerry being a caveat as the turnaround has yet to take root despite the stock price explosion – it constitutes a powerful brake on the issuance of AMC-type shares, which undermines short-term momentum. The kids on Reddit are on to something with an investment in BlackBerry.
Joe tenebruso: Not all actions even are meant to disappoint investors. Palantir Technologies (NYSE: PLTR) is one of the most popular actions on Reddit, and for good reason. The data analytics specialist has a bright future – a future that could potentially generate wealthy income for investors who buy stocks today.
Palantir helps organizations integrate, manage, secure and analyze their business data. He is perhaps best known for his counterterrorism tools allegedly used by the US government in the hunt for Osama bin Laden. But Palantir’s AI-powered data mining solutions have applications in a wide variety of fields, including clinical research, logistics, and energy management, among others.
Palantir’s revenue jumped 47% year-over-year to reach $ 1.1 billion in 2020. This impressive growth is due not only to the addition of new customers, but also to the fact as Palantir’s existing customer base finds new uses for its data tools. Its average revenue per customer was $ 7.9 million last year, an increase of 41% from 2019.
Although Palantir is not yet profitable, it generated positive operating cash flow of $ 117 million in the first quarter of 2021. Going forward, management expects Palantir to increase its revenue. at least 30% and generates adjusted free cash flow of $ 150 million this year.
Gathering actionable information from disparate data sources is expected to become increasingly important to businesses and government agencies in the years to come. Palantir is poised to deliver these increasingly vital services – and deliver good returns to its shareholders along the way.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.