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It's official! Meme stock mania has gripped Wall Street again after three years, sending shares of companies such as GameStop (GME) and AMC Entertainment (AMC) sharply higher this week.
Since the start of the month, GameStop has now surged around 210%, with paper losses for short sellers totaling over $1 billion at the rally's peak, according to S3 Partners data.
Three years ago, a group of retail traders on Reddit (RDDT), led by Keith Gill, inspired a GME short squeeze for the ages, which ultimately resulted in the collapse of hedge fund Melvin Capital. After staying dormant for almost three years, Keith Gill’s account on X, Roaring Kitty, resurfaced late Sunday with a slew of cryptic posts, driving shares of GME and its cohort of meme stock peers higher in the process.
Despite the Reddit crowd's undying enthusiasm for GameStop stock, it remains a fundamentally weak company, and is a high-risk investment for long-term shareholders. The video game retailer reported revenue of $5.27 billion in fiscal 2024 (ended in January), down from $6 billion in fiscal 2022. It remains unprofitable, as operating losses have totaled more than $900 million in the last four years.
To that point, GME is already burning the believers again, down 29% intraday in today's session.
For investors seeking outsized growth potential that's a little more sustainable, here are three top stocks trading under $10 to buy instead of GameStop.
1. Cantaloupe Stock
Valued at $472 million by market cap, Cantaloupe (CTLP) is a fintech company that reported revenue of $67.9 million in fiscal Q3 of 2024 (ended in March), an increase of 12.5% year over year. Cantaloupe is a vertically integrated company that offers solutions such as micro-payments processing, enterprise cloud software, and kiosk and point-of-sale innovations.
At the end of Q3, its active customers totaled 30,670, up from 27,598 in the year-ago period. Moreover, active devices rose by 5.9% to 1.22 million in this period.
Cantaloupe is forecast to expand adjusted earnings from $0.19 per share in fiscal 2024 to $0.27 per share in 2025. So, priced at 24x forward earnings, CTLP stock is quite cheap.
Each of the five analysts covering CTLP stock recommends a “strong buy.”
The mean price target for the fintech stock is $9.90, over 50% above current prices.
2. Immersion Stock
The second stock on my list is Immersion Corp. (IMMR), a company that provides tech solutions for mobile, automotive gaming, and consumer electronics.
IMMR is on track to more than double its sales in 2024 to $69 million, up from $33 million in 2023.
Priced at 7.8x forward earnings, IMMR stock is quite cheap, and also pays shareholders a quarterly dividend of $0.15 for a yield of 1.7%. Immersion has a strong balance sheet and is well-positioned to monetize its intellectual property going forward.
Out of the two analysts covering IMMR stock, one has a “strong buy” recommendation, and the other recommends a “moderate buy.”
The mean target price for IMMR stock is $10.50, a premium of 14% to current prices.
3. GoodRx Stock
The final stock on my list is GoodRx Holdings (GDRX), a platform for prescription savings in the U.S. The company offers consumers free access to transparent and lower prices for generic and brand medications. Since 2011, it has helped consumers save roughly $75 billion and is among the most downloaded medical applications in the past decade.
GoodRx is forecast to end 2024 with adjusted earnings of $0.37 per share, indicating a forward earnings multiple of 18x - which is quite cheap.
Out of the 19 analysts covering GoodRx stock, nine recommend “strong buy,” nine recommend “hold,” and one recommends “moderate sell.”
The mean target price for GDRX stock is $8.92, about 23.7% above current prices.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
