7 Short-Squeeze Stocks to Put on Your Must-Watch List

When this happens, all traders who have shorted the stock scramble to buy the stock back quickly before the price goes even higher. With such high demand, those who hold the stock assume full control and the stock price rises far beyond its true value. Short sellers who fail to cover their positions fast enough can end up with huge losses. The short squeezing of so-called meme stocks has played out multiple times in 2021 as day traders on social-media sites like Reddit and TikTok band together to buy the same name. That, in turn, puts pressure on short sellers to close positions by purchasing shares, which pushes a stock even higher in the process. As attention surrounding GME grew, the stock’s price continued to climb, attracting more investors.

It’s at least as risky as shorting stocks with high short interest in the first place. Despite AN beating earnings expectations and the shares being up over the last year, the company may be gearing up for volatility as recession concerns reach highs. All-in-all, our two strong short interest stocks are excellent buys. AutoNation, Inc. , through its subsidiaries, offers domestic, import, and luxury vehicles. As an automotive retailer, AN also provides financing and insurance to cover its vehicles. It’s key to do the appropriate due diligence when investing in a company post-bankruptcy because the creditors and bondholders typically will own the shares versus equity investors.

That’s down from nearly 40% a few weeks ago, but it’s still an extremely elevated level. On a final note, Canoo has received a recent rating update from two Wall Street firms, both of which are very bullish on the company. With a consensus “buy” rating and an average price target of $14, Canoo shares have an implied upside potential of over 150%. Here, we’ll review two stocks that – being heavily bet against by short sellers – may experience a short squeeze in April. Going long on a stock with high short interest thinking you’re going to get rich off panic-buying by short sellers is an exceedingly dangerous idea.

I prefer to focus on two stocks with strong buy recommendations based on our quant ratings that possess high short interest. While many heavily shorted stocks bring more danger than potential upside, there are always a handful of intriguing short squeeze candidates among them. As of the latest the counter trend move tally, more than 13% of the company’s outstanding shares are shorted, while nearly 29% of the float itself has been sold short. With that said, short selling is one of the most misunderstood strategies in investing. Short sellers aregenerally reviledfor trying to benefit from a bad situation.

Whatever the reason short selling requires solid research, good intuition, and excellent timing if a trader is to profit from speculation. Speculation is the main reason behind short selling, especially on companies that investors feel are overvalued. Companies can suffer from poor business plans, increased competition, and lousy management that may not be accurately reflected in its stock price. In a weekly report released Monday, the data provider Fintel identified five heavily shorted stocks that appear ripe for a short squeeze, especially amid recent surges in trader interest.

However, it is a compelling idea when buying short-squeeze stocks. Indeed, according to Gurufocus.com, Janux features solid financial stability. On the balance sheet, the company features an equity-to-asset ratio of 0.89, ranking better than over 79% of the industry. To add the third dimension to short-squeeze stocks to buy, I’m going to drill into the financials for each candidate.

How to Find Momentum Stocks

Traders looking to make a short-squeeze trade on BBIG are focused on the stock’s modest float and high average trading volume. Short sellers have been betting massively against the stock since May 2021, when the stock first saw short interest above 20%. Short squeezes have been a popular topic among retail investors over the past year or so. Here, we’ll look at some heavily-bet-against stocks where buyers may have the opportunity to prompt a short squeeze.

No, and the reason is that the enterprise represents a few tweaks from being a true contender. Let’s face it, the underlying industry features inelastic demand, especially lexatrade review during the post-Covid period. People recognized the importance of protecting their financial well-being, thus bolstering Lemonade’s insurance business.

Check out this step-by-step guide to learn how to scan for the best momentum stocks every day with Scanz. Check out this step-by-step guide to learn how to find the best opportunities every single day. Funding for education can come from any combination of options and a J.P.

Stocks With Short Squeeze Potential in March

Leading this customer loyalty is the company’s unique objective of vision for all — which is why it donates a pair of glasses to someone in need for every pair it sells. Further amplifying this noble motivation is Warby Parker’s status as a Public Benefit Corporation . The stock is down over 70% since its 2021 IPO, and now is a great time to consider buying Warby Parker. MarketRank evaluates a company based on community opinion, dividend strength, institutional and insider ownership, earnings and valuation, and analysts forecasts. Per its website, the company uses proprietary technology to convert waste PET plastic and polyester fiber – which cannot be recycled via conventional means – into high-value materials.

With an A- overall grade and an A+ forward P/E of 2.04x, Arch is trading at a -75.65% discount to its sector peers. Arch produces and sells metallurgical coal, aka coking coal, from mines. Coking coal is a hot commodity used as blasting fuel in steel-making. Because the energy sector has reached peaks not seen since 2020, the rally has prompted an increase in short-bets against energy stocks. The global energy crisis that has intensified following Russia’s invasion of Ukraine has benefited many energy companies, particularly those based in North America.

Other small and mid-cap electric vehicle manufacturers, such as Workhorse, Arcimoto, and Fisker, also suffer from elevated short interest – each has a ratio of nearly 30%. This trend belies a hard road ahead for EV companies… but it also means their shares are possible targets for short squeezes. With a more than 250% difference to the sector over six months and +380% over nine months, ARCH has incredible growth and profitability potential, substantiating our strong buy recommendation.

How to Use the MarketBeat Short Interest Tracker

Currently, RDVT features a short float of 9.8 and 39 days to cover. Nevertheless, Olink ranks as number 138 on Fintel’s Short Squeeze Leaderboard. Currently, the stock features a short float of 12.3 and over 54 days to cover.

Therefore, on paper, it doesn’t seem like a viable candidate for short-squeeze stocks to buy. Presently, Omega Flex ranks number 80 in Fintel’s Short Squeeze Leaderboard. The security features a short float of 15.5 and nearly 56 days to cover. Typically, hitting double digits on each metric represents a higher-than-average magnitude of bearishness. However, pessimists must be super careful in how they approach OFLX. Additionally, this list could serve as a confirmation indicator for those considering purchasing a technically weak stock.

• Options trading in general is riskier than trading stocks, mutual funds or ETFs simply because there’s a certain amount of guessing that goes on about what will happen with a stock’s price.
• Again, because of the financial proposition undergirding the repair-versus-replacement conundrum, SAH might start rising this year.
• Because the energy sector has reached peaks not seen since 2020, the rally has prompted an increase in short-bets against energy stocks.
• However, the best short-squeeze stocks to buy represent a multidimensional framework.
• The Wall Street Memes staff have chosen three stocks where we believe buyers may have the opportunity to strike back at short sellers.

The aim of this strategy is to benefit from the difference between the price of short selling and the cost of rebuying the stocks. Since the beginning of this year, LOOP has hemorrhaged nearly 72% of its market value. Presently, LOOP ranks number 218 on Fintel’s Short Squeeze Leaderboard. Conspicuously, though, LOOP gained over 2% on the Oct. 10 session, perhaps signaling its inclusion among short-squeeze stocks to buy. The gradual deterioration of the consumer economythis year, it’s understandable why the bears targeted CRCT. To no one’s shock, CRCT ranks 85 on Fintel’s Short Squeeze Leaderboard.

But, the key to getting in on the ground floor of a short squeeze is to spot it before it happens. You need to be ready to take advantage of the situation as soon as a bullish catalyst sets off the squeeze. Chase’s website and/or mobile terms, privacy and security policies don’t apply to the site or app you’re about to visit. Please review its terms, privacy top 5 best candlestick patterns you should know and security policies to see how they apply to you. Chase isn’t responsible for (and doesn’t provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the Chase name. Products, accounts and services are offered through different service models (for example, self-directed, full-service).

Meme ETF: Meme Stocks Are Off to a Good Start This Year

Whenever the number of shares sold short grows beyond 10% of its total shares outstanding, a stock can generally be considered “heavily” shorted. With 15% of total shares held short, Warby Parker easily meets this threshold. With 70% of Warby Parker’s float shares held short, there is the potential for a short squeeze. But if you’re willing to get a little aggressive in light of slim pickings on the long-term front, here’s a closer look at three of the better bets among the market’s most shorted stocks. You need to understand that these are speculative trades and that this really isn’t something worth doing all the time.

Alibaba Stock: How Bulls And Bears Could Profit (Technical Analysis)

Is similarly shorted, with 28% of its float being bet against in the form of a short trade . While only 5% of the total number of outstanding shares are shorted, most of this stock isn’t free-trading, augmenting its potential for a short squeeze. Taking into consideration the risks involved, this strategy is ideal for disciplined traders who know how to cut their losses and cover the losses that they do incur. The approach is also ideal for people who are willing and ready to handle unlimited risks. Short selling also requires constant monitoring as holding an unprofitable position for long may not be a viable strategy for many investors. However, that is not a complete and fair view of the job of a short seller.

Given its long-term outlook and pending bankruptcy proceedings that are complicated by a payment error of $900 million made by Citibank, our quant ratings rate it as a hold. For lower-risk investment alternatives, consider our two short interest stocks with superior fundamentals. What makes the short squeeze case even more interesting in Warby Parker’s case, however, is that its percentage of float shares held short is a much higher 70%.

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Resilience in its balance sheet, with a cash-to-debt ratio of 10.5. For the underlying hardware industry, the median ratio sits at 1.3. In addition, Cricut offers stakeholders a tremendous revenue trajectory. Its three-year revenue growth rate is 57%, better than 98% of the competition. This bad boy features a cash-to-debt ratio of 271 times, ranked better than 80% of biotech firms. OLK) engages in biotechnological products and services marketing and sales.

That’s hardly unusual, however, and even something of a throwback to the pre-meme stock days. After all, biotechnology stocks with small market capitalizations have always been targets for short sellers. Heck, short interest in HRTX has been above 10% since mid-2018. Considering the factor grades below, which rate a stock’s investment characteristics on a relative basis and instantly compare them to its sector, the company is solid from a valuation stance.

The Next GameStop? 25 Stocks With High Short Interest

Short selling is most of the time limited to margin accounts because of the unlimited losses that can come into being if stock prices start rising rather than dropping. Substantial short selling is most likely to occur to companies that are facing significant problems with their business fundamentals. In some situations, shorting a stock can be a rational strategy. But many retail investors have taken issue with the practice recently, especially as some of their favorite stocks have been the target of vicious short-selling activity.