Popularity on social media, high short interest, and momentum are the key features of most meme stocks. While betting on meme stocks is risky because it is challenging to identify optimal entry points, we think it could be worth watching low-priced meme stocks DiDi Global (DIDI), TAL Education (TAL), and Progenity (PROG). Wall Street analysts expect these stocks to rally by more than 20% in the near term. Read on.
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The meme stock craze, which started with the unprecedented short squeeze of GameStop Corporation (GME) and AMC Entertainment Holdings (AMC) earlier this year, has entered a new phase, with retail stock traders targeting fewer names than before.
With most meme stocks traded earlier this year falling significantly from their high price levels, retail traders’ interest in such speculative stocks has declined considerably of late. This is partly due to the practical difficulty in pinpointing correct entry points in these stocks, which makes investing in them very risky.
Nevertheless, we think it could be worth watching recent meme stocks DiDi Global Inc. (DIDI), TAL Education Group (TAL), and Progenity, Inc. (PROG) because Wall Street analysts expect these below $10 stocks to rally by more than 20% in price in the near term.
DiDi Global Inc. (DIDI)
Headquartered in Beijing, China, DIDI is a technology platform that offers a range of app-based services across Asia-Pacific, Latin America, Africa, Central Asia, and Russia. The company’s products include ride-hailing, taxi-hailing, chauffeur, hitch, shared mobility, food delivery, intra-city freight, and financial services. It operates in three segments—China Mobility; International; and Other Initiatives. The company made its stock market debut on June 30, 2021.
DIDI’s total revenue for the trailing-12-months was CNY163.43 billion ($25.55 billion). The company’s trailing-12-months gross profit amounted to CNY17.36 billion ($2.71 billion), and its trailing-12-months operating revenue amounted to CNY156.3 billion ($24.43 billion). Also, its trailing-12-months interest income was CNY1.08 billion ($168.58 million) during the period.
Analysts expect DIDI’s revenue for its fiscal year 2022 to be $38.21 billion, representing 24.7% year-over-year growth. Its EPS is expected to increase 244.4% next year. The stock has surged 11.2% in price over the past month.
Closing the last trading session at $9.81, the $12 average analyst price target represents a 22.3% potential upside.
TAL Education Group (TAL)
TAL is a Beijing, China-based science and technology education company. The company offers smart education, open platforms that deliver public and private education services to kindergarten through twelfth grade (K-12) students. It caters to Xueersi, Mobby, Firstleap, Izhikang, and Shunshun Liuxue and provides consulting services on its websites.
In August, TAL agreed with the holders of its existing 0.50% convertible senior notes due 2026 to repurchase the Notes. The purchase price will be $2.3 billion in cash (the principal amount of the notes) plus accrued and unpaid interest calculated based on an interest rate of 0.50% per annum. This agreement exhibits the company’s robust financial health.
During its fiscal fourth quarter, ended February 28, 2021, TAL’s net revenues increased 58.9% year-over-year to $1.36 billion. The company’s gross profit grew 72.9% from its year-ago value to $781.24 million. Its interest income rose 81% from the prior-year quarter to $35.17 million. Also, the company’s cash and cash equivalents grew 73.1% year-over-year to $3.24 billion.
TAL’s revenue is expected to increase 12.5% year-over-year to $5.06 billion in its fiscal year 2022. Its EPS is estimated to grow 128.6% in the current year. Its stock has soared 9.2% in price over the past month.
A $6.68 consensus price target represents a 36.6% potential gain from the last closing price of $4.89.
Progenity, Inc. (PROG)
PROG in San Diego, Calif., is a biotechnology company that develops and commercializes molecular testing products. The company’s molecular tests are: Innatal Prenatal Screen, Preparent Carrier Test, Riscover Hereditary Cancer Test, and Resura Prenatal Test for Monogenic Disease. Its other offerings include Preecludia preeclampsia rule-out test, Drug Delivery System (DDS) platform, and Oral Biopharmaceutical Delivery System (OBDS).
This month, the United States Patent and Trademark Office (USPTO) issued four patents related to PROG’s ingestible technologies to deliver therapeutics via the gastrointestinal (GI) tract. The awarding of these patents should strengthen PROG’s intellectual property position and enable it to discover and develop advanced therapies.
PROG’s revenues came in at $463,000 for the second quarter, ended June 30, 2021. Its loss per share declined 82.8% year-over-year to $0.65. And its cash and cash equivalents amounted to $65.99 million during the period.
Analysts expect PROG’s EPS to increase 84.3% next quarter and 66.3% in the current year. Furthermore, the stock has gained 171.5% in price over the past month and 19.6% over the past five days.
Closing its last trading session at $2.50, the average analyst price target of $3.67 represents a 46.8% potential upside.
DIDI shares were trading at $9.30 per share on Friday morning, down $0.51 (-5.20%). Year-to-date, DIDI has declined -34.23%, versus a 22.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master’s degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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