Well, the band’s back together again. At least that’s what it feels like across popular social media investing platforms.
The Reddit Army has sure rallied the troops this week. Several Reddit stocks have enjoyed some big runs.
Fueled by the familiar battle cry of “Squeeze the Shorts” and various GameStop references, Reddit traders stormed into stocks like AMC, HMBL, and none other than GME itself.
The so-called meme stocks were among Tuesday’s biggest gainers. GME was up 16% and is showing no signs of slowing down. Ditto for AMC which jumped 20% and staged a big three-day rally.
So why are these names making a reunion tour now? Based on the thousands of GME posts in recent days, there’s an underlying belief among Reddit traders that the short squeezes seen earlier in the year weren’t what they could have been. Many think there’s much more where that came from.
Finding the next GameStop is on seemingly everyone’s minds these days from day traders to long-term investors. Here at Insider Financial we too are on a mission to help our subscribers bank some huge returns. Our “How To Find The Next GameStop” article is a great refresher. It offers some clues as to how you can spot momentum before it turns into a feeding frenzy. That can be found here.
With the Memorial Day weekend approaching, first and foremost we want to remember to thank our military heroes.
Let us also remember four stocks that have been featured by Insider Financial—and are back today!
All are popular Reddit stocks that are creating a stir in recent days. Based on the chatter, each has the potential to skyrocket to new heights.
STOCKS SET TO EXPLODE #1 AMC
AMC finished Tuesday near its intraday high and stayed hot in after-hours trading. In fact, it was the most active issue on the major exchanges with volume above 7 million.
Yet the volume we’ve seen the past few days has been nothing compared to what took place in January when over 1 billion shares were traded in a single day. This makes us think the movie theater chain is still in the coming attractions.
The stage appears set for an epic short squeeze. Short interest has come down since last month but is still elevated. At nearly 100 million shares there appears to be plenty of institutional money still betting on AMC’s demise. If the Reddit Army has their say, the shorts will be buying back at much higher prices this time around.
Adding fuel to the possibility of an imminent short squeeze is the continued bearish sentiment from Wall Street analysts. Last week Citigroup reiterated its sell rating and gave the stock a $3.70 target. The analyst cited AMC’s debt burden and the fact that studios are shifting from theater releases to at-home streaming. On Wednesday, B. Riley Financial downgraded to a hold rating and $16 target denying AMC of its only buy rating. This is miles away from the bevy of single-digit targets on the Street but still below where AMC is currently trading.
Frankly, the fundamentals are becoming irrelevant with AMC. The economic recovery and a return to the movies should in theory be positive catalysts. But the share price is ultimately being driven by the battle of meme stock traders versus short sellers.
Another subplot in the AMC show is the recent exit of Chinese investor Dalian Wanda. Led by billionaire founder Wang Jianlin, the firm owned more than 60% of the stock nearly a decade ago. Last week it reduced its stake to 0.002%. In the words of AMC CEO Adam Aron, “With no controlling shareholder in place, now, AMC will be governed, just as most other publicly traded companies, with a wide array of shareholders.” This includes the growing ranks of social media-influenced traders and investors.
So, with analysts still setting a negative tone and short interest high, this Reddit favorite looks primed for a drama-filled short squeeze.
STOCKS SET TO EXPLODE #2 HMBL
We started covering HMBL when it was trading at $0.027 under the TSNP symbol. You can read that here.
The penny stock has been a frequent runner and gone on to produce some incredible long-term gains for Insider Financial subscribers. The rally may not be over.
HMBL is picking up steam the last few days. The popular Reddit stock has been the subject of many comments lately.
On May 24th, the fintech company announced its foray into the non-fungible token (NFT) space with the launch of the HUBML NFT Gallery. The platform is meant to be a marketplace where NFT creators and buyers converge. It is hoping to attract artists from the entertainment, fashion, gaming, photography, and sports worlds. The gallery’s first collection will feature works from celebrity photographers Andrew Small and Jared Raskind and will run through Friday afternoon. We think the stock will run well beyond Friday.
HMBL CEO Brian Foote commented, “We consider is a rare opportunity at HUMBL, to build a consumer brand on the front end of a technology cycle like blockchain. We look forward to collaborating with our partners to help lead and define this exciting new category in the days ahead.”
Much of the Reddit discussion has also been around Hindenburg Research’s bearish May 20th report. The short-selling firm questions the legitimacy of HUMBL’s business model and lack of execution with its payment platform and potential as a cross-border cryptocurrency transaction processor. We see the slow development as typical of an early-stage fintech company, not to mention the challenges presented in launching an international payments systems during a pandemic.
Longer-term, HMBL’s Pay, Marketplace, and Financial offerings should gain traction in a world that is sprinting towards e-commerce and crypto acceptance. The roadblocks it has faced in expanding overseas should gradually ease as prospective partners and merchants move forward with their IT plans.
In our view, Gold Panda’s bearish May 19th SeekingAlpha article is a similarly nearsighted perspective. After recording no revenue last year, HMBL’s first-quarter revenue was decent but not spectacular. More importantly, it is a step in the right direction in what could become a very lucrative business over the next several years. The digital economy is only going to become more global as developing nations are brought into the fold necessitating demand for innovative international payment solutions.
The huge following on social media doesn’t hurt either. This has been as responsible as the long-term growth narrative for putting HMBL on the map. Retail investor interest could continue to put upward pressure on HMBL regardless of how the subsequent quarterly results pan out.
This is no doubt a speculative investment. But given the massive global payments market opportunity including cross-border currency movement, at this price HMBL is a hell of a risk/reward bet considering the multi-billion-dollar opportunity at play.
STOCKS SET TO EXPLODE #3 MVIS
Speaking of consistent runners, MVIS looks to be gearing up for another rally. We’ve had our eye on MVIS as a buyout candidate since August 2020 which you can read about here.
In recent days, the developer of laser scanning technology for automotive lidar sensors and augmented reality (AR) has received a lot of mentions on Reddit’s Wall Street Bets forum. We’ve seen this before. In the days leading up to the company’s April 29th quarterly report, a short squeeze propelled MVIS to an intraday peak of $28. Soon before, we sniffed out the run which you can read about here.
MVIS has since been cut in half but has regained the 50-day moving average this week in decent volume. This could mean the broader uptrend that started late last year is back on after a month-long consolidation. If the volume is anything like we saw in April, a fourth big run would likely send the stock to yet another new high.
During last month’s short squeeze, short interest was around 19.5% of the float. As of May 26th, it is 21.6%. This suggests the current ‘squeeze the shorts’ campaign could be even more potent.
MVIS hasn’t issued any press releases since its first-quarter report. It did, however, hold its Annual Shareholder Meeting on May 19th. This helped remind the market why the lidar play is one of the most popular Reddit stocks.
Lidar, short for Light Detection and Ranging, determines how far away an object is by using a pulsed laser to measure how long it takes light to travel back to the source. It has widespread application in automotive, consumer electronics, and other industries. The end markets MVIS is initially targeting, autonomous driving and AR, are expected to be high growth markets over the next 10-plus years.
This makes MVIS a compelling long-term tech play. But many on WallStreetBets are looking for a much quicker payout in the form of a buyout.
We still think MVIS is a prime takeout target. Now at a $2.5 billion market cap, this would be an easy purchase for the Microsofts and Facebooks of the world who are in the same markets and sit on massive piles of cash.
Meanwhile, MVIS hasn’t been subtle about marketing itself as an attractive acquisition target. It dedicated an entire slide in the shareholder meeting to the “Future Opportunity” which simply stated:
“Acquiring company would be able to generate cash from acquisition within 1-2 years with limited investment required to complete product.”
We get it MVIS. You have really cool technology backed by an extensive patent and intellectual property (IP) portfolio.
Whether it gets bought out or not, the upside potential here is tremendous.
STOCKS SET TO EXPLODE #4 SIRC
SIRC is a solar roofing company that was highlighted in Insider Financial’s penny stock movers article on December 29th. You can find that here.
The stock caught our attention after it reported quarterly revenues of $5.2 million that equated to 130% year-over-year growth—and more than 12% of its market cap.
It caught the attention of the market as well. The third-quarter report along with the stock’s connection to the incoming Biden administration’s green energy ambitions sent it sky-high in early February. The $3.00 peak was more than 10x where the stock closed at the time of our December 29th article.
Since then, it has come back down to Earth as investors have rotated out of high multiple solar energy and EV plays. SIRC also has an EV charging business that we think can be a valuable revenue diversifier and growth driver.
With SIRC falling out of favor, SeekingAlpha’s Gold Panda pounced on a chance to kick a bear while it’s down. Among other things, the March 24th article noted a lack of organic revenue growth.
We would argue that inorganic revenue growth can be just as valuable especially in the high-growth markets SIRC competes in. There are plenty of great roll-up strategy stocks out there generating strong top-line growth and shareholder returns. Landscape supply company SITE comes to mind.
SIRC is bringing another business into the fold that is forecast to provide a major jolt to revenues. On May 18th, it announced the acquisition of Future Home Power, a San Diego-based residential solar panel specialist with additional capabilities in roofing and battery storage. Future Home Power expects to have 60 sales reps by the end of this month driving over $1 million in incremental weekly sales at a 45%-plus gross margin. That should help boost SIRC’s profitability and alleviate concerns around operating margins such as those voiced by Gold Panda.
Many Reddit folks have been saying that this OTC stock will be the next runner. We too think the bottom is near and the future bright.
As we keep saying, there are always opportunities in the markets and it’s our job to find winning stocks before they run for our subscribers. Huge gains can be made in such a short amount of time.
If you like any of these 4 stocks set to explode, our best advice is to be patient and throw bids in below the market. Buying dips and selling rips as swing trades remains the best strategy.
It’s also important to look for stocks that have yet to run. There are plenty of opportunities out there and we screen hundreds of penny stocks each week looking for the best alerts for our subscribers.
Remember, all it takes is one or two to become a winner and you’ve crushed the market indices for the year.
As always, good luck to all (except the shorts)!
WHEN INSIDER FINANCIAL HAS A STOCK ALERT, IT CAN PAY TO LISTEN. AFTER ALL, OUR FREE NEWSLETTER HAS FOUND MANY TRIPLE-DIGIT WINNERS FOR OUR SUBSCRIBERS. WE SPECIALIZE IN FINDING MOMENTUM BEFORE IT HAPPENS!
Disclosure: We have no position in any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.