Deep in one of the more passionate and hyperbolic corners of the internet exists a community of investing subReddits. What once existed as a public forum for discussing stock prospects and company valuations has now evolved into several different pockets of speculative fervor. After all, it’s very exciting to get together with strangers on the internet and speculate how high your portfolio of meme stocks or penny stocks can go.
That being said, it’s important to keep in mind that, no matter how often an investor might frequent these forums, they are always behind the action. Thus, investors in meme stocks are at the mercy of the volatile decision-making of individuals with millions of retail investing followers, such as Keith Gill.
Furthermore, keep in mind that playing the meme stock market usually means looking for companies in a bad position financially. That makes them cheap enough to be bought up during shorting interest to create a short squeeze. If you’ve taken this all into consideration and you’re still interested in investing in meme stocks, here are the top three worth keeping an eye on due to a mix of real market potential and meme attention.
Cutera (CUTR)
One of the most common aspects of meme stocks is a catchy ticker. Oftentimes, the online community will band together around a nickname for the stock through its ticker, which could bode well for Cutera’s (NASDAQ:CUTR) prospects of becoming a meme stock. Moreover, the meme stock movement often focuses on stocks with high short interest to force a short squeeze for even higher returns in the event of a community buy. Cutera’s currently sits at 38.94%.
The company itself, however, focuses on the increasingly popular nonsurgical cosmetics industry, which some predict could reach $12 billion by 2027. To address the growing market, Cutera has developed several energy-based treatments for things like excess adiposity, acne and vascular pigmentation. These treatments are safer, albeit somewhat less effective than surgical techniques, and do not cost as much for patients as traditional plastic surgeries.
As a result, Cutera could be a target for meme investors who want to rebel against institutional shorting and are confident in its business model. Beyond its meme potential, however, the company is still a legitimate investing opportunity, depending on the trajectory of its addressable market.
Trupanion (TRUP)
Pet insurance is an incredibly cute mission statement for meme investors to rally around, but it also has its ups and downs. Such is the case with Trupanion (NASDAQ:TRUP), which has seen a stunning 45% growth in the last month with 39.62% of its shares shorted.
It’s uncertain if meme investors will turn their attention to TRUP stock, as it’s not currently popular on the meme side of Reddit (NYSE:RDDT). However, it has the makings of one and could very well experience an organic short squeeze without the online community. That’s because its financials have reflected consistent improvement and growth in recent quarters, such as its subscription revenue up 22% year-over-year for Q1.
Despite consistently increasing annual revenue as well, TRUP has struggled with the comedown from its massive overvaluation during the pandemic pet craze. As a result, it’s currently in a kind of limbo where any investors expect it to drop, but its value proposition is strong.
Upstart Holdings (UPST)
Around three years ago, Upstart Holdings (NASDAQ:UPST) received a thrashing by meme investors on Reddit. The controversy at the time followed its coverage on CNBC, which the online community interpreted as market manipulation, as Upstart was still freshly on the market at the time. Since those days, the company has represented a shell of its former self, having lost roughly 93% of its value from its peak price of $390 and 32% of its value from its initial public offering price.
Currently, 34.54% of the company’s shares remain shorted but its recent rally in the last few days has led it to grow about 10%. That puts several positions into confusing propositions, as many recommend selling or holding. Yet, its first-quarter financials last month showed a 24% year-over-year growth in revenue alongside increased spending and utilization.
Thus, Upstart could catch the attention of the meme community once again, should its performance continue to conflict with perception. Ultimately, it’s one of the better business propositions among meme stocks.
On the date of publication, Viktor Zarev 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.