There’s always something fresh to see in the stock market if there’s one constant. Last year, investors negotiated a once-in-a-generation pandemic, which resulted in the S&P 500 seeing one of the sharpest bear market falls in history. Meanwhile, the year 2021 has been dedicated to recognizing the importance of retail investors.
Retail investors on Reddit’s WallStreetBets chatroom have banded together in the last two months to combat institutional investors and hedge funds. This was accomplished by purchasing stock and out-of-the-money call options on firms with large levels of short interest from these primarily younger investors. The purpose of these retail investors has been to induce a short squeeze, which sends short-sellers fleeing as targeted companies rise “to the moon,” as the Reddit crowd would put it.
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If you buy these Reddit stocks, you’re asking for problems.
There’s no doubt that video game and accessory retailer GameStop (NYSE:GME) and Canadian legal cannabis producer Sundial Growers (NASDAQ:SNDL) are two of the most-followed and owned stocks among the Reddit audience. In late January, GameStop was the most short-sold stock in terms of its float, while Sundial Growers is both a penny stock and substantially short-sold, attracting young investors twice as much.
The issue is that neither firm is particularly appealing from an investing standpoint — to put it mildly.
Take GameStop, which increased its e-commerce sales by more than quadrupling over the 2020 holiday season, but saw overall sales fall by 3%. The only way for GameStop to address its delay in focusing on digital gaming is to keep closing its physical stores. GameStop hopes that by eliminating stores, it will be able to cut costs sufficiently to return to profitability.
The most serious problem in Sundial is the more than $600 million in cash it raised. Despite clearing up its balance sheet, the business issued 1.15 billion shares in less than five months. In my more than 20 years of tracking the market, that’s some of the worst dilution I’ve ever seen. Sundial is also far from profitable at a time when the majority of marijuana stocks are poised to turn the corner into recurring green.
Don’t bother with Sundial or GameStop: These businesses will treble your investment.
Instead of falling into these Reddit traps, my advice is to forget about GameStop and Sundial Growers and instead invest in the three growth stocks listed below if you’re serious about triple your money.
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Cybersecurity, according to Okta, should be one of the fastest-growing industries of the decade. Businesses were already moving online and into the cloud well before the epidemic hit. The coronavirus just supplied the necessary kick in the pants to hasten this change. As organizations shift more of their private data to the cloud, third-party suppliers like Okta should bear a greater share of the responsibility for data security (NASDAQ:OKTA).
Okta is a company that specializes in identity authentication. To protect clients’ data, the company uses a portfolio of cloud-native solutions that rely on artificial intelligence. In other words, Okta’s solutions are always improving their ability to detect and respond to possible threats. Okta is able to offer new solutions to its customers as they scale because the platform isn’t designed to be a one-size-fits-all solution. Okta will become a cybersecurity behemoth thanks to its ability to offer additional products to existing customers.
Okta’s recent announcement that it would acquire primary rival Auth0 for $6.5 billion in an all-stock deal is also worth noting. Auth0 will remain independent as a brand, but it will operate under the Okta umbrella. Auth0 should be especially useful in increasing Okta’s reach outside of the United States and into Europe. This acquisition should help the company’s already-burgeoning growth prospects even more.
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Northern Star’s Purchase
Northern Star Acquisition is a name that most people aren’t familiar with (NYSE:STIC). It’s a Special Purpose Acquisition Company (SPAC), which appear to be a dime a dozen these days. Northern Star, on the other hand, has announced its merger partner, dog-focused goods and service firm BarkBox, and the agreement is anticipated to finalize in the second quarter.
What do you think about BarkBox? The company, which sends out toys and other themed items on a monthly basis, had about 1.1 million subscribers at the end of the fiscal third quarter. This is an increase from the 663,000 subscribers it had at the end of fiscal 2020. It’s also worth noting that the product retention rate is nearing 95%, the highest it’s ever been since the company’s start.
BarkBox, like most subscription-based businesses, is targeting a healthy gross margin of roughly 60% by 2023, and it’s on course to more than double its revenue to north of $700 million. Given that year-over-year pet expenditures in the United States haven’t decreased in at least a quarter-century, it’s a safe bet that BarkBox’s core service and new goods (BarkBox Eats, Bark Home, and Bark Bright) will propel Northern Star Acquisition (soon to be BarkBox) to new heights.
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Jushi Holdings is a company based in Japan.
I don’t think it’s unreasonable for individual investors to be interested in marijuana equities. Cannabis is expected to be one of the most rapidly rising sectors in the coming decade. But there’s no denying that U.S. marijuana equities are where the big money is. Jushi Holdings (OTC:JUSHF) is the name to buy if you’re looking for a growth investment that will treble your money.
Jushi has pursued growth in an aggressive — yet extremely safe — manner. Three states are the company’s primary focus: Pennsylvania, Illinois, and Virginia. The first two have a cap on how many retail licenses they will issue, whereas Virginia awards dispensary licenses based on jurisdiction. The argument is that in 2021, almost 80% (or more) of Jushi’s revenues will come from countries where it will encounter little or no competition. Jushi is guaranteeing that its brand has the best possible opportunity of being established from the bottom up by selecting limited licensing states.
Jushi has also shown a desire to expand its footprint through acquisitions. Since the beginning of the year, the company has acquired a California dispensary and license holder, as well as a 100 percent equity stake in Pennsylvania dispensary permittee Agape Total Health Care. Since its establishment, Jushi has received approximately $45 million in financing from its management team and insiders. When executives have skin in the game, shareholders usually benefit.

This post is the author’s own view, which may differ from a Motley Fool premium advice service’s “official” recommendation position. We’re a mishmash! Questioning an investing theory, even our own, encourages us to think critically about investing and make decisions that will make us smarter, happier, and wealthier.
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