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While WSB typically targets fundamentally weak stocks with a considerable level of short interest, we believe that a few of the subreddit’s heavily discussed stocks possess sufficient fundamental strength to generate solid returns. AZZ Inc. (AZZ) and Del Taco Restaurant Inc. (TACO) are two such stocks. They could prove to be long-term winners on the back of their improving fundamentals. So, they could be solid bets now.
In contrast, with extremely high price levels relative to their underlying business fundamentals and financial strength, we think Root Inc. (ROOT) and Wrap Technologies Inc. (WRAP) could suffer a major pullback in the near term. Hence, these stocks are best avoided now.
