Making big money from short-squeeze stocks became a trend during the euphoric growth stock rally of 2021. Investors targeted depressed stocks with high short interest, and an initial rally quickly transformed into a big upside on short covering. With plenty of action in the penny and meme stock space, there continue to be some good short-squeeze opportunities.
I understand that many investors exclusively focus on quality ideas for long term investing. However, as a new age investor, I would allocate 5% to 10% of my funds towards relatively speculative bets. Quick gains from these ideas can be allocated towards building the long-term portfolio.
Therefore, this column focuses on three short-squeeze stocks that can double or triple within the next few quarters. In my view, these stocks represent undervalued ideas, and a reversal in sentiment is likely to translate into a big rally. Let’s discuss the reasons for being bullish on these trading bets.
Short-Squeeze Stocks: Riot Platforms (RIOT)
In my view, Riot Platforms (NASDAQ:RIOT) is the most undervalued Bitcoin (BTC-USD) miner. RIOT stock trades at a forward P/E of 13.4 after a 20% correction in the last 12 months. With a valuation gap, strong fundamentals, a robust growth outlook and a high short interest, the Bitcoin miner is poised to go ballistic.
Riot Platforms often appear among memes and speculative stock ideas. However, the company has strong fundamentals. As of Q1 2024, Riot had a zero-debt balance sheet and a cash buffer of $1.3 billion (including the value of digital assets).
Further, the company has ambitious growth plans for the next few years. As of Q1 2024, Riot reported a hash rate capacity of 12.5EH/s. Riot is planning to increase capacity to 31.5EH/s by the end of the year and to 100EH/s by 2027. Therefore, there is clear visibility for robust revenue, EBITDA and cash flow upside. If the execution is good and Bitcoin remains in an uptrend, RIOT stock will likely zoom higher in the coming quarters.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) has sharply corrected by 51% for year-to-date. Even after a meaningful downside, the short interest in the stock remains high at 20%. With positive business developments, I believe a massive short-squeeze rally is on the cards.
BLNK stock has been negatively impacted by intense industry competition and cash burn. However, there are two positives amidst the concerns. First, Blink has a big addressable market in North America and Europe. With significant room for penetration for EV charging infrastructure, Blink has headroom for growth even amidst competition. For Q1 2024, the EV charging company reported stellar revenue growth of 73% yearly to $37.6 million.
Further, Blink Charging has focused on cost control, and with operating leverage, the company is moving towards EBITDA-level profitability. Blink has guided for positive adjusted EBITDA by December 2024. Margin expansion will likely sustain in 2025 and beyond on operating leverage and as services revenue swells.
Therefore, Blink Charging is likely to see better days ahead in terms of profitability. This is likely to translate into BLNK stock surging higher from oversold levels.
Short-Squeeze Stocks: Plug Power (PLUG)
With a likely season for meme stocks, Plug Power (NASDAQ:PLUG) might be poised for some big price action. The renewable energy stock has witnessed a 75% meltdown in the last 12 months. However, short interest remains significantly high at 27%. I would not be surprised if there is a 100% to 200% short squeeze rally from current levels.
There is no doubt that Plug Power has weak fundamentals. However, in a meme euphoria, fundamentals are largely ignored. Further, there are some positives to talk about for Plug Power in the recent past.
First, the company received a commitment for a $1.66 billion loan from the U.S. Department of Energy. This loan will be used to develop, construct and own up to six green hydrogen production facilities.
Further, Plug recently announced that it has achieved a “significant milestone reaching 7.5 gigawatts in global basic engineering and design package contracts.” This offering was launched two years ago, and the backlog has swelled significantly. The execution of these global contracts will translate into revenue upside.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
