5 Best Meme Stock to Buy in October 2021

The meme stock mania took over the US stock markets in the first quarter of 2021. While the euphoria has since subsided, there are still some meme stocks that are worth buying. Here are five such stocks that you can buy in October 2021.

Since the term meme stock is itself unofficial, there is no official definition of meme stocks. However, we can define them as companies that have seen a spurt in prices and volumes and have become popular on social media groups.

1. Blackberry (NYSE: BB)

Blackberry was among the most famous meme stocks and the pumping from Reddit traders took it as high as $28.77. The stock now trades at a third of its peaks but is still up a cool 42% for the year and is outperforming the markets by a wide margin. Down sharply from its peak, BB looks like a good meme stock at these prices.

Last month, BB reported better than expected earnings in the fiscal second quarter and both its topline and bottomline were better than expected. That said, the company’s revenues fell on a yearly basis in the quarter and its net losses also swelled. It also warned of the negative impact from the fall in automotive production. Notably, global automotive production has taken a hit as the global chip shortage has been a hindrance. The global automotive industry is expected to lose billions of dollars in production this year due to the chip shortage. Ancillary companies like BB are also affected by the slowdown in automotive production.

What makes BB a good meme stock to buy

While the term meme stock has derogatory connotations, BB looks like a good stock to buy in October. The company is benefiting from the strong secular headwinds in cybersecurity, IoT, and 5G. BB today is a far different company than it was a decade back. The company has been transforming its business which would add long-term shareholder value. To be sure, like many other meme companies, BB is also posting losses. However, if you are looking at a meme stock to buy in October, BB should be on top of the list. The stock’s valuations look reasonable and it trades at an NTM (next-12 months) EV (enterprise value)-to-sales multiple of 6.6x which is slightly higher than its average for the last year.

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2. Nokia (NYSE: NOK)

Nokia is another meme stock that should be on your radar. It went on to hit a 52-week high of $9.79 but has since fallen sharply from the peaks. However, the stock is still up 45% in the year.

Nokia has been losing market share to Ericsson as well as Huawei. However, given the continued clampdown on Chinese 5G companies by the US, companies like Nokia could end up gaining market share in the future. The Trump administration had warned allies against allowing Chinese 5G companies for telecom gear. The Biden administration has been equally, and at times even harsher on China. More US allies could shun Chinese 5G companies in the future which makes non-Chinese 5G stocks like Nokia a good proposition.

Nokia is a good 5G meme stock to buy

If you are looking at a reasonably valued 5G stock, NOK looks like a good bet. The pivot towards 5G is a structural shift and looks among the most promising investing themes for the next five to ten years. The company is working on a turnaround under its CEO Pekka Lundmark and is targeting double-digit operating margins by 2023.

To be sure, almost all the meme stocks have a “turnaround” story behind them. However, Nokia’s turnaround is supported by strong growth in the 5G industry which is further amplified by the current macro environment where several countries are shunning Chinese companies over security concerns.

Wall Street analysts are also bullish on NOK stock and according to the data from Koyfin, its consensus target price of $7.17 implies a 27% upside over current prices. The stock has 14 buys and eight hold ratings. Overall, NOK is among the best meme stocks to buy and the sharp fall from the peak have only made the stock more attractive.

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3. Sundial Growers (NYSE: SNDL)

SNDL is another popular meme stock. The company is a penny cannabis company. However, it has a lot of cash on its balance sheet which it is now investing in other cannabis companies. Notably, the recent weakness in the marijuana industry could actually be positive for SNDL.

As the macroeconomic environment has deteriorated somewhat for marijuana companies since the first quarter of 2021, they may find it difficult to raise funds. This is where the millions of dollars on SNDL’s balance sheet would come into play. If management invests the cash wisely, which it has done so far, the investments would pay off in the medium and long term.

SNDL is a good meme stock in the cannabis industry

SNDL is a good meme stock to buy in the cannabis industry. Currently, SNDL’s business operations are primarily concentrated in Canada. However, it might soon make a foray into the US cannabis market. SNDL and other cannabis stocks have been under pressure for quite some time now amid receding hopes for quick cannabis legalization in the US. However, it would be worthwhile to hold the stock at these levels. The worst could be over for cannabis stocks, and SNDL seems to provide a good entry point at these levels.

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4. Affirm (NYSE: AFRM)

BNPL (buy-now-pay-later) company Affirm is also among the best meme stocks for October. The stock has raced towards its 52-week highs amid the sharp rally over the last couple of months. Affirm is a play on the rising BNPL market and its deal with Amazon only makes it more attractive. If you are looking at a meme stock that has high growth potential over the long term, AFRM would fit the bill.

Affirm is among the newest meme stocks

When we think of meme stocks, GameStop and AMC Entertainment would possibly be the two names that would come to mind. However, amid the splendid rally since August and the growing popularity on Reddit group WallStreetBets, AFRM is also a meme stock now. The stock should be on your radar if meme stocks attract you. While the current valuations might have become somewhat stretched, BNPL stocks have seen a rerating over the last couple of months. The company’s deal with Amazon could also be a game-changer and could help increase the revenues significantly from these levels.

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5. Naked Brands (NYSE: NAKD)

Naked Brands is another popular meme stock. The company exited its loss-making physical retail business earlier this year as part of the transformation. The company is the exclusive online seller of Fredericks of Hollywood. Meanwhile, like fellow meme stocks, it also went on a share selling spree and has $270 million as cash on the balance sheet.

NAKD is a meme stock with a strong balance sheet

The company does not ahs any debt on the balance sheet which looks encouraging. Meanwhile, many have been concerned about how it would be investing the cash. Last month, the company announced that it has found a merger target and is working to get the deal closed.

“I am happy to report that after extensive searching and due diligence, we believe we have found a disruptive opportunity in the clean technology sector. Due diligence on both sides is progressing and we believe the business combination will reward our patient shareholders,” said Naked Brands’ CEO Justin Davis-Rice.

Now, an intimate apparel seller getting into clean energy is not what NAKD investors were expecting. However, if the management can come up with a good deal in the sector, it could be a game-changer for the company. Overall, NAKD looks like a good meme stock to buy and bet on the turnaround and the impending acquisition news.

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