Meme stocks are coming off a wild week.
For those who had gotten in at the lows in January, they’d be up more than 2,000%. But, AMC is still considered highly speculative and there are other high-risk, high-reward stocks that deserve attention, according to two traders.
“It is at the all-time highs and normally I would never come here and say, ‘Hey guys, look at Nvidia, it’s at all-time highs, it’s a great time to buy it.’ But the reason why I like this and I put it in that momentum retail-trader category is because of the stock split coming up,” Shay said. “Last year, what we saw with Apple and Tesla both, when their stock splits were announced, we had a massive rally that was largely due to the retail crowd.”
Nvidia’s board in May approved a 4-for-1 stock split, set to go into effect July 20. In the days after Apple’s stock split last August, shares surged by as much as 7%.
Nvidia is “a solid company, great fundamentals. Technicals, it’s at the highs, but I’m looking at this to go potentially up to $750, maybe even $800, because if you look at it right now, it has this massive momentum because of the stock split,” said Shay. “I’m trading this in the options market with a low-risk, high-reward butterfly targeting that $750 price point in the next two weeks.”
A move to $750 implies nearly 7% upside. Shay’s higher target, $800, would mean a 14% rally from Friday’s close of $703.
Craig Johnson, chief market technician at Piper Sandler, named Plug Power as his high-risk, high-reward pick. The stock closed Friday at $30.58.
“This is a stock that, coming off the March lows, has risen almost 3,000%. It’s corrected 75% off the highs we had seen just a couple months ago in February, and now technically, we’ve just reversed the downtrend … and moved above our 50- and 200-day moving averages,” Johnson said during the same interview.
He added that the reason this name fits into his “high-risk category” is because the stock group Plug Power belongs to looks to be losing momentum.
“When I go back and I look at some of our longer-term group work that we do at Piper Sandler, I have noticed that when we’ve seen 26-week momentum spikes in the overall industry group in which Plug Power fits into — we saw it in 2000 we also saw it in 2013 and we just saw it again — usually these stocks have to correct for the better part of 24 to 36 months,” said Johnson.
He sees 125% upside for Plug and only roughly 29% downside to get back to its downtrend resistance level.
Disclosure: Shay holds NVDA.