2021 may go down in history as the year of the meme stock. Indeed, the rise of meme stock favourites such as AMC Entertainment, GameStop, and BlackBerry (NYSE: BB) has been incredible to watch. Some significant moves in certain stocks have grabbed a lot of attention of late. Accordingly, questions remain as to whether such meme stocks are worth considering right now.
In this article, I’m going to highlight two stocks that are on my watch list right now. These are meme stocks (or potential meme stocks) that I think have excellent upside in their own right, aside from the meme stock trend.
Meme stock watch: Cineworld
While not necessarily being a meme stock yet like sector peer AMC, Cineworld (LSE:CINE) certainly is a comparable company. And I think it’s a possible meme-stock-in-waiting. With pandemic restrictions ended, reopening is key for both cinema operators. As we all yearn for dinner and a movie, expectations are that both will perform well over the near term.
Cineworld has seen a big price swing in a relatively short amount of time. The shares went from around 25p in late 2020 to nearly 125p early this year. Currently, Cineworld shares are up over 64% compared to their price of a year ago. So it’s trending in the right direction.
Yet Cineworld is also one of the most-shorted UK shares right now, meaning there are plenty of experienced investors betting it will fall. Given its relatively low price per share and high short interest, Cineworld exhibits some key meme stock traits. Should the price fall, this is a stock I’ll be considering for my portfolio.
Of course, there are still concerns around how robust its recovery will be. New Covid variants could see a return to lockdown measures, which could mean cinemas having to close again. Should additional lockdowns be imposed, Cineworld is one UK share that could suffer. These are risks I’m monitoring closely with Cineworld shares and it’s not a Buy for me at present.
One company that comfortably falls into the meme stock category is BlackBerry. This former smartphone-maker-turned-software-company has been on my watch list for some time.
BlackBerry’s meteoric rise this year was the result of two key catalysts, I feel. Of course, frenzied retail buying played a huge role in taking BlackBerry shares from around $5 per share in late 2020 to nearly $30 in January. This was one of the first meme stocks, and continues to hold this title.
However, in late 2020, BlackBerry also announced a key partnership with Amazon to develop BlackBerry IVY. This is a scalable, cloud-connected software program aimed at car manufacturers. This platform allows for real time data and analytics functionality to improve the passenger experience in the connected car market. Given the growth we’ve seen in this sector, this is something I’ve been excited about since late last year.
That said, BlackBerry remains a turnaround stock. The company’s transition to a pure software business hasn’t been as smooth as I’d like to see. In fact, two of the past four earnings reports undershot revenue expectations.
However, this is also a company with excellent long-term growth prospects relating to its Amazon partnership and exposure to the connected vehicle market. Sure, there’s potential near-term potential. But I’m thinking longer term with this stock, and watching it closely.
Chris MacDonald has no position in any stocks mentioned in this article. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended BlackBerry and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.