Investors should avoid meme stocks and focus on companies like Walmart, Anheuser-Busch InBev, and Baidu.

From Morningstar: 2024-05-28 08:13:00

Meme stocks, popularized by GameStop and AMC Entertainment, are resurging with explosive short squeezes resulting in triple-digit gains. However, the momentum fizzles quickly, causing meme stocks to plummet just as rapidly. Long-term investors should focus on stocks with strong fundamentals for portfolio growth.

Walmart, a retail giant, reported over $440 billion in domestic sales and $115 billion in international sales in fiscal 2024. Shares surged due to strong earnings, including a 6% revenue jump to $161.5 billion. Walmart’s unmatched scale and promise of low prices solidify its position as a leading retailer.

Anheuser-Busch InBev, the largest brewer globally, surpassed expectations in the first quarter of 2024 with EBITDA of $4.9 billion and a 90-basis-point margin expansion. The company benefits from cost advantages, fixed-cost leverage, and high cash flow conversion. The stock’s fair value is set at $90 per ADR, with projected revenue growth.

Baidu, a Chinese internet giant, dominates the local search engine market with 84% share. The company is focusing on AI, cloud services, and autonomous driving for growth. However, challenges may arise in the advertising space due to growing competitors like Tencent and ByteDance. The stock’s fair value is estimated at $174.



Read more at Morningstar: Hate Meme Stocks? Buy These Companies Instead