Investors are once again chasing some of the most speculative names in the stock market

• Animal spirits have returned to the stock market as investors again pile into high-risk names.
• Carvana, for example, has soared nearly 700% year-to-date even as it navigates a precarious financial position.
• "Meme-type stocks have been catching a bid of late, which paints a bullish picture of general market conditions," DataTrek Research said.

A new bull market in stocks has led to the return of animal spirits among investors, DataTrek Research said in a Friday note.

Investors are once again chasing high-risk stocks in a market that has done little but gone up since the lows notched last October. The S&P 500 has surged about 30% since then, while the Nasdaq 100 is up 50%.

That's an about face from 2022, when stocks consistently trended lower and led to a despondent investor base that was bearish on just about everything.

But in 2023, speculative stocks like Carvana, Riot Platforms, and Marathon Digital have printed impressive year-to-date gains of between about 500% and 700%. These stocks are considered high-risk because they are not yet profitable and, in some cases, have substantial amounts of debt.

The most recent example of animal spirits might be found in Nikola. The electric vehicle company, which is still in recovery mode from the downfall of its former fraud-convicted CEO, Trevor Milton, saw its stock price soar as much as 109% this week after it said it will sell 50 of its fuel-cell powered trucks over the next five years.

Many of these types of stocks make up the Roundhill MEME ETF, which has jumped about 60% so far in 2023. And according to DataTrek Research co-founder Jessica Rabe, the gains could continue as the ETF is still about 50% below its record high seen in December 2021.

"Meme stocks' current positive momentum shows investors' animal spirits are starting to run hot again," Rabe said.

The sharp rally in high-risk stocks and its signal that investor enthusiasm has returned to the market is also indicative of the fact that equities are indeed in a bull market as they march on to new 52-week highs.

"Meme-type stocks have been catching a bid of late, which paints a bullish picture of general market conditions," Rabe said.