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Enthusiasm around “meme stocks” has eased for young investors a year on from the GameStop Corp trading frenzy, with Gen Z’s attention shifting to companies in areas like electric vehicles and the “metaverse,” according to a report released on Friday.

The top stock holding among the Gen Z cohort - people born after 1996 - in the fourth quarter was Tesla Inc, according to the quarterly investor outlook from Apex Fintech Solutions, which provides custody and clearing services for brokers like SoFi, Stash, WeBull, and Goldman Sachs Group’s Marcus.

AMC Entertainment slipped from the No. 1 spot in the top 100 ranking of stocks for the first time in several quarters, to No. 3, said the report, which analyzed more than 1 million Gen Z accounts held by Apex’s clearing arm.

GameStop, which retail investors piled in to last January in a social media-fueled attempt to punish short sellers, dropped five spots to No. 11, the report showed. Meme stocks with less mainstream buzz fell more, with e-commerce platform Wish’s owner, ContextLogic, down 35 spots at No. 56 and biopharmaceutical company Ocugen Inc dropping 41 spots to No. 91.

Electric vehicle startup Rivian Automotive Inc, which went public in November, debuted at No. 44, while Chinese EV maker NIO held the No. 8 spot and Ford Motor Co was No. 19.

Shares of Facebook parent Meta Platforms Inc rose a couple of notches to No. 12, while Roblox rose 36 spots to No. 36.

“There’s a lot more interest in metaverse,” Apex Chief Executive Officer Bill Capuzzi said in an interview. “As more NFT companies become public, we’ll probably see them move in to the top 100.”

The metaverse generally refers to shared virtual world environments which people can access via the internet, often making use of virtual reality or augmented reality.

Payment companies were also popular with young investors, with Paypal Inc jumping 9 spots from the third quarter to No. 19, while Block, formerly called Square, was steady at No. 25.

-- John McCrank, Reuters

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Stocks to ponder

Cameco Corp. (CCO-T) Kazakhstan has witnessed a wave of deadly protests since the start of the year, and that presents risks to the supply side of uranium given that the country is the largest producer of the commodity in the world. As Philip MacKellar of The Contra Guys argues, it adds to the bullish case for uranium and Canada’s Cameco.

The Rundown

This Netflix hit is a warning to overly optimistic investors

An unpleasant reality is hurtling toward us, but most people don’t want to acknowledge the impending collision. If you think this sounds suspiciously like Don’t Look Up, you are absolutely correct. The much-watched Netflix epic does an outstanding job of showing what happens when society confronts any large shared risk – be it a cosmic disaster, a pandemic or climate change. As the characters played by Jennifer Lawrence and Leonardo DiCaprio discover in the movie, the first reaction to any warning of such dangers is a shrug. Then comes denial, along with appeals to look on the bright side. This classic pattern is playing out in markets now - and as Ian McGugan tells us, it’s a warning to investors everywhere.

U.S. energy shares on fire again to start 2022, stoked by inflation

Shares of U.S. energy companies are soaring in the early days of 2022, driven by a shift to so-called value stocks and assets that stand to benefit from the steepest inflation in nearly four decades. And as Lewis Krauskopf of Reuters reports, the outlook remains promising.

Earnings to test U.S. growth stocks after rocky start to year

A rough start to 2022 for U.S. tech and growth stocks is raising stakes for upcoming earnings reports, as investors seek reasons to keep faith in the shares while bracing for U.S. interest rate hikes. Lewis Krauskopf of Reuters reports.

Fed’s hawkish communications blitz takes aim at skeptical market

The Federal Reserve has clearly ratcheted up its new year anti-inflation rhetoric to match red hot labour markets and consumer price gains - but the speed and breadth of its tone change may have as much to do with forcing money markets to take it more seriously. Jamie McGeever of Reuters reports.

Others (for subscribers)

The highest-yielding stocks on the TSX, plus risk data

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Friday’s Insider Report: Management executive cashes out $12-million from this large-cap stock trading near a record high

Number Cruncher: These 15 high-yielding TSX dividend stocks have sustainable payouts

Number Cruncher: Two Canadian banks among U.S.-listed financials showing bullish price momentum

Equities hedge funds outperform in 2021 despite volatility and retail surge

Ask Globe Investor

Question: If an ETF indicates ROC as part of its distribution, is that always bad? Bad meaning that the ETF’s distribution represents return of investment, rather than gains achieved by the fund. Thank you in advance for your response. – Ernst W.

Answer: ROC is short for return of capital and it’s actually a desirable form of income distribution in that it is not taxed in the year received. Instead, your cost base is adjusted to reflect the amount of the ROC. The net effect is that you’ll have to pay more tax when you eventually sell, but at the capital gains rate.

Some securities are deliberately structured to generate a high percentage of ROC income. They include real estate investment trusts (REITs), limited partnerships, and some mutual funds.

Here’s how it works. Let’s assume you buy 100 shares of a security at $10 in a non-registered account. At year-end, your distributions include $1 in ROC. You deduct that from your original purchase price, giving you an adjusted cost base of $9 per share. If you then were to sell at $12, you’d pay tax at the capital gains rate on $3 per share ($12-$9 = $3), instead of $2 per share based on the original amount you paid. Note that only half of capital gains are taxable.

ROC is not desirable if the net asset value of your security declines, because that means you are being paid with your own money and taxed on the payout. But in the context of a REIT or similar security, it’s a tax-efficient way to receive income.

--Gordon Pape

What’s up in the days ahead

Rob Carrick updates the Two-Minute Portfolio, which had a tough time matching the heady gains of the TSX Composite last year.

U.S. bank earnings, BoJ and (another) virtual Davos: World market themes for the week ahead

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff

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