The best short-squeeze stocks to buy now can be a perilous territory in the investment landscape. However, they also possess the potential for astronomical returns. At the heart of this phenomenon is a strategic psychological game.
When investors dive into heavily shorted securities, they’re not merely making a casual bet; they’re essentially trying to ignite a panic among those who are betting against the stock. Here’s how it works: short-sellers borrow shares they don’t own and sell them on the open market, hoping to buy them back at a lower price and pocketing the difference.
However, if the price starts to rise, these short-sellers might rush to buy the stock back to avoid further losses. This buying pressure can cause the stock price to surge upwards in a short squeeze, further magnifying returns for those on the opposite side of the bet. Yet, it’s imperative to remember that not all heavily shorted stocks are prime for a squeeze. Indeed, many such stocks are heavily shorted for a reason – basically underlying weaknesses in the business. However, occasionally, the market might be overlooking positives.
It’s in these rare situations where the truly best short-squeeze stocks to buy now can be found.
Plying its trade in the medical laboratories industry, Celcuity (NASDAQ:CELC) specializes in cellular analysis. Specifically, it’s primarily focused on discovering new cancer sub-types and commercializing diagnostic tests to improve the clinical outcomes of cancer patients. The company uses its proprietary CELx platform to functionally analyze live patient tumor cells, helping to inform about potential treatment strategies.
While seemingly relevant, CELC unfortunately attracted the attention of the bears. Since the start of this year, CELC has lost more than 22% of its equity value. At the moment, CELC ranks number seven on Fintel’s Short Squeeze Leaderboard. Notably, its short interest is 6.73% of its float but carries a large short interest ratio of 25.29 days to cover.
Admittedly, Celcuity suffers from poor financial stats overall. For example, its three-year EBITDA growth rate sits at 53.2% below breakeven. Still, CELC may rank among the best short-squeeze stocks to buy now. Although circumstances don’t look appealing, Craig-Hallum’s Alexander Nowak pegs CELC as a buy. Also, four months ago, Needham’s Gil Blum forecasted a $25 target, implying almost 151% growth.
Wheels Up Experience (UP)
One of the riskiest ideas among the best short-squeeze stocks to buy now, Wheels Up Experience (NYSE:UP) is a provider of “on demand” private aviation. It operates on a membership-based model, where members can access a fleet of private plans based on their membership tier. Fundamentally, Wheels Up entered the business domain to provide more flexible flying options.
While relevant, the core issue likely centers on the total addressable market. Basically, not many people can fork over the money necessary for membership, especially in this economy. As a result, UP stock ironically fell down more than 74% since the beginning of this year. Since its public market debut, Wheels Up cratered more than 97% of its equity value.
Unsurprisingly, Wheels Up ranks as number 15 on Fintel’s Short Squeeze Leaderboard. Notably, it features a short interest of 15.97% of its float.
Still, UP options’ implied volatility (IV) curve indicates rising anticipation of activity as the strike price increases. Also, Jefferies’ Sheila Kahyaoglu pegs UP a buy with a $4 price target, implying 47% growth.
A medical aesthetics company, Sientra (NASDAQ:SIEN) specializes in plastic surgery and regenerative medicine solutions. The company may be best known for its augmentation and reconstruction procedures in the chest area. To be sure, it’s a relevant enterprise, with SIEN gaining just over 37% of equity value since the beginning of this year.
Nevertheless, Sientra also attracted attention of the bears. Right now, SIEN ranks number three on Fintel’s Short Squeeze Leaderboard. Specifically, its short interest comes in at 8.52% of its float. As well, its short interest ratio is 11.11 days to cover. One week ago, SIEN ranked as number 27. So, it’s dubiously made quite a leap.
Still, this dynamic could also open the door for SIEN to be one of the best short-squeeze stocks to buy now. Interestingly, SIEN’s IV curve indicates heightened activity around the $7.50 strike price. Also, analysts rate Seintra as a unanimous strong buy with a $4.50 price target, implying almost 51% upside.
For red-blooded American patriots, the best part of waking up is the sharp staccato of .223 Remington rounds buzzing through the air as they print tight groupings on a paper target. Coffee is also good too. Fortunately with BRC (NYSE:BRCC) – the founder of the Black Rifle Coffee Company brand – you can have both.
Fundamentally, BRC appeals to consumers based on the pent-up demand principle. To be blunt, Americans generally don’t like to be told what to do. And BRC symbolizes one of the few business entities that clashes with so-called “woke” progressivism. Obviously, such a framework will appeal to many people. However, the framework also repels many people.
Given that BRC’s total addressable market will necessarily be limited due to its ideological views, it’s not surprising that it attracted bearish attention. Currently, BRCC ranks number 29 on Fintel’s Short Squeeze Leaderboard with a short interest of 17.63% of its float.
Admittedly, though, BRCC’s IV curve suggests heightened activity at the northern end of the strike price spectrum. Also, analysts peg BRCC a moderate buy with a $6.35 price target, implying 56% growth.
Technically part of the financial services industry, CompoSecure (NASDAQ:CMPO) specializes in the design and manufacturing of premium metal payment cards and other premium metal card products. While it might sound like a “silly” luxury, according to CompoSecure’s website, 70% of customers would prefer metal cards over plastic cards if all benefits were equal. So, in theory, it’s carving out a nice niche.
As well, investors have responded well to CMPO, gaining over 42% since the start of the year. In the past 365 days, shares moved up over 31%. Still, the loss of momentum is evident. In the trailing six months, CMPO faded to the tune of more than 7%. And while CompoSecure benefits from some positive financial metrics, it also suffers in others. For instance, it incurs negative long-term revenue and EBITDA growth.
Given this context, CMPO is number eight on Fintel’s short squeeze list. Notably, its short interest ratio stands at nearly 27 days to cover. However, it’s also worth mentioning that CMPO’s IV curve rises alongside an increasing strike price.
Analysts are unanimously bullish, anticipating over 69% upside. Thus, CMPO could be one of the best short-squeeze stocks to buy now.
An e-commerce platform, RumbleON (NASDAQ:RMBL) facilitates the buying, selling, trading and financing of motorcycles, ATVs, boats and other recreational vehicles; you know, the fun stuff that your significant other won’t let you do. In all seriousness, RumbleON allows users to conduct various transactions in a streamlined manner. As well, with these transactions being 100% online, it makes for a hassle-free experience.
Although many riders will undoubtedly find the platform appealing, regular investors don’t seem to get it. As a result, RMBL fell nearly 24% since the January opener. To be fair, Gurufocus warns its readers that shares could represent a possible value trap. For instance, its revenue multiple of 0.06x may be too cheap.
Combined with a poor growth trend and a shaky balance sheet, RMBL has become number 16 in Fintel’s short squeeze list. Currently, it runs a short interest of 5.98% of its float and a short interest ratio of nearly 10 days to cover. Still, for speculators, RMBL could be one of the best short-squeeze stocks to buy now.
In part, that’s because a rising IV curve alongside an increasing strike price range may indicate bullish speculation. Also, analysts peg RMBL a unanimous strong buy with a $10.67 target, implying nearly 93% growth.
VistaGen Therapeutics (VTGN)
Listed under the pharmaceutical preparations industry, VistaGen Therapeutics (NASDAQ:VTGN) focuses on developing new generation medicines for anxiety, depression and other central nervous system (CNS) disorders. Specifically, VistaGen develops its drug candidates based on its understanding of key CNS signaling pathways and their potential to foster therapeutic benefits. Naturally, it’s one of the most relevant enterprises available.
To be sure, the market has responded positively to VTGN because of the underlying potential. Since the start of the year, VTGN gained over 33% of equity value. However, in the past 365 days, it only moved up less than 6%. And in the trailing five years, VTGN fell more than 87%. That’s not exactly confidence inspiring, finding itself as number 18 on Fintel’s short squeeze list.
However, it’s possible that for speculators, VistaGen may be one of the best short-squeeze stocks to buy now. While options traders are definitely hedging for tail risk, VTGN’s IV curve also rises alongside an increasing strike price range. Possibly, this dynamic suggests anticipation of higher price mobility.
Lastly, Maxim Group’s Jason McCarthy forecasts shares hitting $30, implying 478% upside.
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.