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3 Heavily Shorted Stocks to Buy Anyway

Don't get squeezed out by the bull run, buy these stocks

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Stocks to Buy – KB Home (KBH)

short-interest-stocks-to-buy-kbh-stockShort interest: 28% of float

The only homebuilder on the list of 26 stocks with short interest is KB Home (KBH). Its short interest at the end of December was 23 million shares. KBH stock took a breather in 2013, delivering a respectable total return of 16.3%, almost double the residential construction industry, but well behind the S&P 500.

Zacks had some positive things to say about KBH in early January, stressing that both the company and the industry as a whole are getting stronger, making KBH and homebuilders good stocks to buy.

The KBH Q4 earnings results show a company on the mend. As CEO Jeff Metzger points out, “Our fourth quarter results provided a solid finish to 2013 with both revenues and profits up from the prior year. We also posted full-year net income for the first time in several years.” Actually, 2013 was its best financial performance since 2006.

After six years of losses, insiders will gladly take the $40 million profit and build on the momentum. With higher average selling prices in all of its regions combined with healthier gross margins, it’s no wonder analysts are upping estimates seemingly on a monthly basis. I agree with Zacks. This is one of the best shorted stocks to buy now.

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