Goldman says it’s time to play the meme stocks again
We are so back. The S & P 500 and Nasdaq Composite scored fresh record highs on Tuesday, as expectations of a lower overnight lending rate from the Federal Reserve reawakened animal spirits on Wall Street. Goldman Sachs also pointed out that this latest run to all-time highs coincides with increased retail participation by Main Street investors — which could signal it’s time to delve into meme stocks once again. “Recent weeks have seen a resumption of retail buying activity in S & P 500 and [Nasdaq] 100 stocks, and we believe the meme stock resurgence has spread into the broader buying of large-cap stocks,” strategist John Marshall wrote. “Given the pickup in retail trading, we see the potential for elevated upside asymmetry in stocks with high retail participation in the coming weeks,” he added. According to Goldman, among the S & P 500 stocks that have seen high retail participation over the past month in terms of net retail activity are the following: Palantir — $1.2 billion AMD — $774 million KeyCorp — $163 million Electronic Arts — $42 million Albemarle — $19 million UPS — $123 million Warner Bros Discovery — $167 million Marshall recommended clients buy call options on these stocks with high retail participation. A call option gives the owner the right to buy a stock at a predetermined price — or the strike — for a specified period of time. “Our data shows that retail investors were more focused on small-caps in the crypto/AI/retail/quantum-computing spaces during the past several weeks than on large-cap names. Professional investors have also stepped up their participation through the futures/swaps/options channels … and we see further upside, as the case for a September rate cut is more likely,” Marshall said. To be sure, the retail momentum could be derailed if new data ahead of the Fed’s September meeting shows a reversal to the upside in inflation trends. But for now, if Goldman is correct, investors may want to buy meme stocks like it’s 2021. Elsewhere Wednesday morning on Wall Street, Piper Sandler raised its price target on Nvidia to $225 , signaling about 23% upside. The move comes ahead of the chipmaker’s earnings due out later this month. “We are expecting another positive quarter from NVDA and see upside to numbers for both the July and October quarters,” analyst Harsh Kumar said. “While we are modeling largely in-line for the July quarter and slightly below Street for October, we are calling for upside given the recent positive commentary from U.S. hyperscalers as well as the inclusion of revenues from China.”
<
