These casualties of the meme-stock bust could be due for a bounce, Evercore ISI says

Published Mon, Jan 31 20221:36 PM ESTUpdated Mon, Jan 31 20226:24 PM EST

It's been about a year since the rise and fall of the so-called meme stocks, but Evercore ISI said a handful of the names could be due for a comeback. In the first quarter of 2021, pessimism was absent in the market and speculative activity exploded. Day traders in online chatrooms managed to create massive short squeezes in names like GameStop and AMC Entertainment , which inflicted huge pain for short sellers and jolted volatility in the overall market. "1Q21 marked a major top for these stocks, with many in relentlessly grinding bear markets, spiraling downward in 180-degree opposition to early 2021's promise as 2022 gets underway," said Julian Emanuel, Evercore ISI equity and derivatives strategist. The firm said the selling in speculative names and growth pockets of the market has spread to the broad market this January. The S & P 500 is off 5% this month, the Nasdaq Composite is in correction territory, and the small-cap benchmark Russell 2000 is down more than 10% to begin the year. "Could the same meme/concept/profitless stocks now heavily shorted and universally reviled, topped in 2021's triumph, be set to rally in 2022's Fear and Loathing?" said Emanuel. Evercore screened for what it calls "meme stock 180's." These are names that are down more than 50% from their peak in the first half of 2021 during the meme-trading frenzy. These stocks have short interest greater than 10% of float and top quartile of short interest in the past year. These names have a market capitalization greater than $1 billion and a share price above $10 per share. "Such stocks could be positioned to do a 180-degree turn should 'cooler heads prevail' in the weeks ahead," added Emanuel. Take a look at the list here. Rocket Pharmaceuticals is down more than 77% from its peak in February 2021. Plus, the stock has about 18% short interest as a percentage of float, which could mean the name is ripe for a comeback from the retail crowd. Energy names Sunnova Energy , Plug Power and Sunrun also appear on Evercore ISI's list. The trio are down 69%, 75% and 76%, respectively, from their peaks in the first quarter of 2021. Editas Medicine is down more than 82% from its top in January 2021. Oak Street Health is more than 77% off its high, and Shift4 Payments is down roughly 57% from its peak from last year. Famous meme stock AMC Entertainment also made the list, but the stock is not rated by Evercore. Twist Bioscience , Stitch Fix , Teladoc Health, Peloton and Wayfair also made the list but are rated "in line" by Evercore. To be sure, Evercore's theory depends on whether the overall market stabilizes. The firm gave its predictions against "a backdrop of earnings and economic strength in 2022," as well as 3.0% GDP growth into 2023 as forecasted by Ed Hyman, founder and head of economic research at Evercore ISI. — with reporting from CNBC's Michael Bloom.

Plug Power hydrogen delivery truck.

Source: Plug Power

It's been about a year since the rise and fall of the so-called meme stocks, but Evercore ISI said a handful of the names could be due for a comeback.