There’s a simple reason why short-squeeze stocks to buy represent a powerful catalyst: they’re intuitive and easier to engage.
Buying something and hoping that it appreciates in value represents an organically sensible strategy. It’s the reason why people collect everything from baseball cards to luxury Swiss watches. Stated differently, it doesn’t take much to explain the rationale behind short-squeeze stocks to buy.
On the other hand, shorting a stock represents an incredibly complex affair by comparison. First, you must borrow the security in question, setting up a contractual relationship. Second, you must sell said security. Third, you must wait for the price of the stock to fall. Fourth, you must buy back the deflated equities. Fifth, you must return the borrowed amount of stock. And it’s at this point you collect the difference.
Of course, it can all go disastrously wrong if the security rises in value. You’re still contractually obligated to return the equities back to their owner. That’s where the buy-side presents a much simpler proposition: they sell, you buy, that’s it.
On that note, here are the short-squeeze stocks to buy.
MicroCloud Hologram (HOLO)
Easily one of the hottest trades in recent sessions, MicroCloud Hologram (NASDAQ:HOLO) states that it’s committed to the application of holographic technology and provides software and hardware solutions with holographic technology as the core. Prior to its mercurial swings last month – along with dramatic spikes in 2023 – not much has been discussed about HOLO.
In other words, MicroCloud should be considered pure speculation. Engaging it as anything else is liable to damage your portfolio. Just look at the 52-week performance to understand what I’m talking about.
Anyways, as a quick trade among short-squeeze stocks to buy, I’m not opposed to the idea. Per Fintel, HOLO stock features a short interest of 73.63% of its float. That’s massively high, ranking it as one of the most shorted securities right now. I imagine with the low price point of below $7, MicroCloud will inspire retail speculators to jump aboard.
A word of caution, though: the short-interest ratio sits at only 0.29 days to cover. That means the bears can unwind their position inside one day. So, if you do engage HOLO stock, it’s quick in, quick out.
Biomea Fusion (BMEA)
I love Biomea Fusion (NASDAQ:BMEA). Earlier this year, I took a chance on its out-the-money (OTM) call options. It was a wild ride but ultimately, a nice pop from short-squeeze speculation drove my derivative contract to profitability. I punched out and I’m glad I did. BMEA fell in the session after.
That’s a good reminder: don’t stick around too long with short-squeeze stocks to buy. When you get your profit, secure the bag and move on. Likewise, if you’re losing, try to get in a habit of mitigating your losses. Take too many ideas down to the bone and you’ll be hurting.
Now, what makes BMEA stock compelling at this juncture is that it’s already seen significant volatility. In the past five sessions, shares stumbled almost 17%. However, it’s one of the most shorted securities, featuring a short interest of 61.87% of its float. Also, the short interest ratio comes in at 9.48 days to cover.
Another factor that makes Biomea worthy of consideration for short-squeeze stocks to buy: BMEA commands a unanimous strong buy rating with a $54.43 price target, projecting over 244% upside potential.
Novavax (NVAX)
Earlier, it was difficult to see the bullish case for Novavax (NASDAQ:NVAX). Even before NVAX stock began tumbling hard in 2022, concerns existed about the company falling behind in the clinical race to forward a Covid-19 vaccine. Later, when fears of the SARS-CoV-2 virus plunged, so did the vaccine manufacturing specialist. However, NVAX may now receive a new lease on life as one of the short-squeeze stocks to buy.
It’s already enjoyed a phenomenal performance. In the past five sessions, NVAX gained almost 28%. In the trailing month, shares shot up over 48%. Yet, it’s also possible that this speculative rally is still in its early stages. Since the January opener, NVAX stock only gained less than 12%.
What’s fueling the upside performance is almost surely speculative fervor among retail investors. Per Fintel, NVAX’s short interest stands at just over 44% of its float. Its short interest ratio is modest but not nothing at 4.41 days to cover. If a true panic materializes, the bears will need almost the full business week to unwind their positions.
Keep close tabs on Novavax – this name could get very interesting!
BioXcel Therapeutics (BTAI)
Based in New Haven, Connecticut, BioXcel Therapeutics (NASDAQ:BTAI) might be another name among short-squeeze stocks to buy for speculators. Per its website, BioXcel focuses on innovative medicine backed by the power of artificial intelligence. Through its approach to drug development, it aims to optimize research and development economics and short development timelines. It also hopes to achieve increased probabilities of success.
All I know is that when you start talking about AI and, well, whatever, you’re liable to see valuation jumps. That will likely be a part of the narrative should BTAI stock finally find some positive footing. Right now, it’s down almost 90% in the trailing year. However, bullish gamblers are not discouraged. Per Fintel, BTAI’s short interest of float stands at 34.67%. Also, the short-interest ratio clocks in at 11.14 days to cover.
If BTAI starts moving higher, that may leave the bears panicking. You’re talking about more than two business weeks needed to unwind the short positions based on average trading volumes.
Also, BTAI carries a moderate buy rating among analysts. Plus, I’m sure the shorts are looking at the average price target of $7, implying over 136% growth potential.
Guess? (GES)
For the long term, it’s difficult to – uhh, guess – where apparel retailer Guess? (NYSE:GES) will ultimately head. Given the significant shifts in the apparel industry, with young people no longer as enticed by brand names as with prior generations, it’s difficult to pinpoint forward probabilities. Further, you have broader economic concerns. Let’s face it, the American consumer can’t keep pace with inflation indefinitely.
However, GES may be one of the short-squeeze stocks to buy for extreme gamblers. Since the start of the year, shares have gained a bit over 8%. However, that could be just the warmup before the big run. According to Fintel, the short interest of Guess? Stands at just under 27%. Keep in mind the benchmark for extremely high short interest is 20%.
Also, the short interest ratio at 13.51 days to cover is up there. Stated differently, GES bears are boxed are in on the horizontal and vertical planes. So, don’t expect them to parkour their way out of this one so easily.
Also, analysts give it the slight nod, with a moderate buy assessment and high-side price target of $33.
RumbleON (RMBL)
Based in Irving, Texas, RumbleON (NASDAQ:RMBL) is billed as a platform to turn motorcycles into cash. Further, its website claims that since 2017, millions of riders have turned to RumbleON when it comes to selling their motorcycles. Some of the key attributes include an easy process along with a unique cash offer technology.
Since its public market debut in 2016, RMBL stock has been all over the map. The good news is that shares are up for early bird investors. However, the not-so-great news is that in the past five years, the company lost 92% of equity value. At the same time, I suppose that helped drive the case as one of the possible short-squeeze stocks to buy.
Some patience may be required with RumbleON so speculators should be warned. Per Fintel, the short interest comes in at “only” 10.45%. As well, the short-interest ratio is high but relatively modest when compared to similar trades at 7.95 days to cover.
Still, what makes RMBL particularly dangerous for bears is that it features a moderate buy assessment among analysts. Not only that, they peg a price of $11, implying over 50% upside potential.
Tupperware Brands (TUP)
One of the most volatile and unpredictable ideas over the past five years has been Tupperware Brands (NYSE:TUP). During this period, TUP stock lost more than 95% of equity value. So, it hasn’t been a buy and hold, that’s for darn sure. However, if you played your cards right, you could have ridden the short squeezer higher. Conversely, you could have shorted it yourself.
Now, after going through some will-it, won’t-it bankruptcy drama, Tupperware is back; that is, it’s back as one of the possible short-squeeze stocks to buy. As an extremely risky enterprise, I can’t say that it’s a good investment. It’s not – not even close. However, I’d also be disingenuous if I said it had absolutely zero chance of shooting higher.
Right now, TUP stock features a short interest float of 20.47%. That’s just above the threshold of being extremely high. Also, the short-interest ratio stands sat 11.13 days to cover. That’s also quite elevated.
To be fair, no analyst presently covers TUP stock. Those that did in the past one-year period rated shares as a hold. Still, it’s a wild world, this business of shorting. Anything can happen so watch this space closely.
On the date of publication, Josh Enomoto did not have (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.
