Throughout this year, meme stocks were among the biggest boom-and-bust securities in the market due to their high short interest and retail trader-driven short squeeze characteristics. And we believe fundamentally strong meme stocks Nokia (NYSE:NOK) and United States Steel (NYSE:X) could be great bets now. Conversely, we think fundamentally weak stocks AMC (AMC) and BlackBerry (NYSE:BB) are now best avoided. Read on.Meme stocks are characterized by high short interest and retail trader-driven short squeezes thanks to their popularity on social media platforms like Reddit and Twitter (NYSE:TWTR). However, with most meme stocks falling significantly from their high price levels, retail traders’ interest in such speculative stocks has declined considerably of late. It’s challenging to identify correct entry points in these stocks, which makes investing in them very risky.
However, some social-media favorites possess sufficient fundamental strength to generate solid returns. We think Nokia Corporation (NOK) and United States Steel Corporation (X) are two such stocks. They could be long-term winners on the back of their improving fundamentals.
In contrast, because popular meme stocks tumbled this month on investor caution regarding the next, crucial Federal Reserve update, we think fundamentally weak meme stocks AMC Entertainment Holdings, Inc. (NYSE:AMC) and BlackBerry Limited (BB) are best avoided now.