WallStreetBets Stock Tips September Week 2 Roundup

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Reddit group WallStreetBets has been instrumental in pumping several stocks. Stocks that get popular on the group have seen a sudden spike in prices and trading volumes. While the group does not look as potent as it did in the first quarter of 2021, it still manages to impact asset prices.

Some of the Reddit stocks are typical meme stocks and their valuations and fundamentals are detached from the price action, However, some of the WallStreetBets stocks are fundamentally strong companies where even Wall Street analysts see upside potential. Here are the five such stocks that you can consider buying this week.

  1. Clover Health (NYSE: CLOV)

Clover Health went public through a reverse merger with Chamath Palihapitiya’s Social Capital Hedosophia Holdings III (IPOC). The stock features regularly among the top WallStreetBets stocks and is currently among the top five names on the channel. The stock has been volatile in 2021. It fell after the Hindenburg Research allegations and later when it lowered the guidance for 2021 for most of the metrics.

CLOV is a top WallStreetBets’ stock pick

However, while some of the Reddit stocks like GameStop and AMC Entertainment have at the best a questionable long-term outlook, CLOV is among the WallStreetBets stocks that have a positive long-term outlook.

CLOV expects US Medicare Advantage spending to more than double between 2019 to 2025, and reach $590 billion. The expected increase in Medicare Advantage is positive for companies like CLOV. The company expects its revenues to rise to $1.72 billion in 2023. For 2021, it has given a revenue guidance of $820 million at the midpoint.

Overall, Clover Health looks among the best WallStreetBets stocks that you should be watching this week. If the management can deliver on the projections that it is providing, the stock could be a multibagger in the long term.

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  1. Root Insurance (NYSE: ROOT)

Root Insurance went public last year. The company’s business model revolves around offering differential rates for auto insurance, something that Tesla is also working on. The stock is down almost 59% this year and is among the top discussion topics on WallStreetBets. Like Clover Health, Root Insurance’s earnings have disappointed markets and it fell to an all-time low last month.

It has since rebounded from the lows on buying support from Reddit traders. Meanwhile, Root Insurance looks like a good WallStreetBets stock that you should consider for the long term.

Analysts are not too bullish on Root Insurance stock

Wall Street analysts are not too bullish on Root Insurance stock, just like many other WallStreetBets stocks. Of the 13 analysts covering the stock, only two rate it as a buy while ten rate it as a hold. One analyst has a sell rating on the stock. Its median target price of $6.5 is a discount of almost 2% over current prices. However, its street-high target price of $13 is a premium of 97%.

Last month, the company also announced a partnership with the used car platform Carvana to develop insurance solutions for car buyers. Carvana also announced a $126 million investment in Root Insurance.

“This integrated solution will give Root exclusive access to a scaled and growing channel of prospective customers at the important insurance decision point of buying a car, which positions us to deliver on an immediate customer need and drive sustainable policyholder growth,” said Root Insurance CEO Alex Timm.

All said, the outlook for differential premium companies like Root Insurance looks positive. In the traditional framework, drivers with good driving habits end up subsidizing others who don’t have a good track record. By offering differential rates, companies like Root Insurance can transform the auto insurance market.

Root Insurance looks like a good WallStreetBets stock to buy and bet on the fintech revolution.

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  1. Affirm (NYSE: AFRM)

Staying in the fintech space only, Affirm is another WallStreetBets stock that you should be watching. The BNPL (buy-now-pay-later) company has been in the news over the last couple of months. It had tumbled after news came out that Apple is planning to enter the BNPL market. However, the sentiments changed after Square announced the acquisition of Afterpay at a massive premium.

The biggest driver for Affirm meanwhile came when the company announced a partnership with e-commerce giant Amazon to bring its BNPL solutions to select customers on the platform. While the offer would be available to only a few customers, to begin with, it could be scaled up in the future.

Affirm reported spectacular earnings

Affirm’s fiscal fourth-quarter revenues also topped estimates. It reported revenues of $261.8 million in the quarter which were 71% higher than the corresponding period last year and were ahead of the $224.4 million that analysts were expecting. Its guidance was also better than expected.

The BNPL company expects to post revenues between $1.16-$1.19 billion in the fiscal year 2022. Analysts were expecting the company to report revenues of $1.16 billion in the year.

Affirm stock is a new entrant to WallStreetBets

Affirm stock is a new entrant to the top names on WallStreetBets. However, it is a good stock to buy and bet on the future of the BNPL market. Wall Street analysts are not too bullish on this WallStreetBets stock though and consensus estimates call for a 7.6% downside over the next 12 months. However, after the company’s earnings release, we could see analysts raise their target price and take a more bullish view of the stock.

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  1. Ford (NYSE: F)

While pure-play electric vehicle stocks like Tesla, NIO, Nikola, and Workhorse feature regularly on WallStreetBets, not many legacy automakers are the typical WallStreetBets stock. However, Ford is among the popular stocks on WallStreetBets currently. The stock is up sharply this year and could continue its good run looking at the tepid valuations and its aggressive vehicle electrification plans.

Wall Street analysts are bullish on Ford stock

For a change, Ford is among the WallStreetBets stock where Reddit traders and Wall Street analysts have similar views. Ford’s median target price of $17 is a premium of 33% over current prices. The stock has a buy rating from 13 analysts while nine analysts rate it a hold. One analyst has a sell rating on the stock.

Ford is betting aggressively on electric vehicles

Ford has increased its outlay towards electric vehicles and autonomous technologies and these investments are paying off. In its second-quarter earnings release, the company said that its Mustang Mach-E is the second largest selling electric SUV in the country. It has received 120,000 preorders for its F-150 Lightning, the electric pickup that it launched earlier this year. The company also said that three fourth of these bookings have come from customers who are new to Ford.

While Ford is among the leading WallStreetBets stocks currently, it’s a fundamentally strong stock to buy and bet on the turnaround under the CEO Jim Farley.

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  1. ContextLogic (NYSE: WISH)

ContextLogic is another favorite WallStreetBets stock. The company is an e-commerce platform and went public last year pricing the shares at $24. The stock has looked weak since the listing and last month hit an all-time low of $6.14 after disappointing earnings.

After WISH’s second-quarter earnings, several analysts had downgraded the stock. William Blair downgraded the stock to equal weight. “Since its IPO, reported results have missed Street expectations (and our model) across key engagement metrics (i.e., MAUs) for three consecutive quarters,” said William Blair analysts in their note. They added, “Given both macroeconomic headwinds and company-specific headwinds specific to user engagement and retention, we do not have good visibility into our forecast.”

Loop Capital also lowered WISH’s target price from $20 to $15 while retaining its buy rating. Citigroup and Stifel Nicholas also lowered the stock’s target price to $7.5 and $8 respectively.

WISH is a good WallStreetBets stock for patient investors

However, looking at the strong growth outlook for the e-commerce sector, WISH looks like a good buy. The company is changing its business strategy to focus more on the retention of the existing user base rather than growth. These efforts would only reflect in the company’s performance in the medium to long term.

If you are willing to be patient and not get too perturbed by the short-term volatility, WISH looks like a good WallStreetBets stock to buy in September.

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Mohit Oberoi is a freelance finance writer based in India. He has completed his M(BA) with finance as majors and also holds a CFA charter. He has over 14 years of experience in financial markets. He has been writing extensively on global markets for the last seven years and has written over 7,500 articles. He covers metals, electric vehicles, asset managers, tech stocks, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.