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3 Most-Shorted Stocks to Buy That Are ‘Just Right’

most-shorted stocks - 3 Most-Shorted Stocks to Buy That Are ‘Just Right’

Source: Shutterstock

Redditors and short-squeezes go hand-in-hand these days. And the stock action is bananas. But not all of the market’s most-shorted stocks are necessarily part of this popular storyline. And as we’ll explain below, that’s promising for investors other than apes and bears in three higher short-interest stocks.

The short-squeeze play has risen to notorious prominence in 2021. Thank the likes of GameStop (NYSE:GME) and AMC (NYSE:AMC) as the two main characters responsible for this showmanship and jumpstarting the most-shorted stocks movement back in January.

To be sure, after several months the action and marketability in these high-short interest stocks peaked. It’s how cycles in the market work. Pot stocks. EVs. SPACs. But it’s also true it’s far from curtains for this market spectacle.

Bottom line, the short-squeeze play remains relevant with tens and even hundreds of millions of shares being traded daily. But honestly, the majority of those most-shorted stocks don’t deserve recognition without fear of pandering to rampant and irresponsible speculation.

Rather than the durability of GME or AMC stock, which to different degrees have been given new leases on life as publicly traded companies, most of the scheming in the market’s most-shorted stocks looks like Marin Technologies (NASDAQ:MRIN) or Newegg (NASDAQ:NEGG). There’s disastrous consequences on the way up and down if bullish apes and bears are a day early or one trading session late in acting.

  • Riot Blockchain (NASDAQ:RIOT)
  • FuboTV (NYSE:FUBO)
  • Livent Corp (NYSE:LTHM)

Today and to avoid these extreme too hot and ice cold situations let’s examine three most-shorted stocks with solid just-right qualities off and on the price chart for investors other than bears or apes.

Most-Shorted Stocks to Buy: Riot Blockchain (RIOT)

Riot Blockchain (RIOT) higher-low double-bottom confirmed on weekly
Source: Charts by TradingView

The first of our just right, most-shorted stocks to buy is Riot Blockchain. In our estimation the crypto miner has a lot of qualities working in its favor.

First, there’s the promise of digital currencies and decentralized finance being a secular market trend. RIOT stock is one of the crypto market’s larger mining plays. And it turned the corner on profitability with massive triple-digit revenue growth over the past year. Net, net the big picture looks good.

What else does Riot Blockchain have making it just right for bulls? It may be this most-shorted stock’s size. RIOT’s roughly $3 billion mid-cap valuation means it’s not too small to go unnoticed or even too large with possibly less room for continuing on its growth trajectory.

Lastly, if you’re upbeat a punishing bear market cycle has completed or is nearly finished in cryptos, RIOT looks even better as a stock to buy.

A higher-low bottoming pattern backed by a bullish stochastics formation and a just right, not-too-small or too large bear population of 20% short interest, should help with RIOT stock’s chances for upside.

I’m favoring a September $33/$42 collar combination as a risk-managed way to position for this most-shorted stock’s best and more challenging times sure to follow.

FuboTV (FUBO)

fuboTV (FUBO) multi-week pullback off 50% level confirmed
Source: Charts by TradingView

FuboTV is the next of our just right, most-shorted stocks to buy. And as with RIOT stock, there’s plenty of reasons to wager on FUBO’s upside prospects.

So, what about FUBO stock makes it a buy? For starters, the streaming sports play has been growing like gangbusters. Also, with FUBO’s pending lateral move into a huge market opportunity by adding sports betting to its platform, you can bet (pardon the pun) FUBO’s outsized growth is a trend in motion that’s staying in motion.

This most-shorted stock is also just right for investors because, and similar to Riot Blockchain, FuboTV offers an enticing $3.7 billion valuation and short-interest of around 20% for help in growing a longer-term bullish storyline.

Lastly and right now on the price chart, FUBO stock has confirmed a four-week pullback test of its 50% Fibonacci level for investors to make a play. To stay in the game with increased odds of success in this most-shorted stock, I’d suggest a September $28/$36 collar.

Most-Shorted Stocks to Buy: Livent Corp (LTHM)

Livent Corp (LTHM) lifetime cup with high handle consolidation
Source: Charts by TradingView

The last of our just right, most-shorted stocks is Livent Corp. LTHM stock is a supplier of critical raw materials. More specifically and exciting, one of the end markets demanding Livent’s lithium is the booming EV space.

Without lithium today’s battery technology for EVs is dead in the water. And as a pure-play in this market, LTHM has been enjoying its share of business success, as well as harboring bearish doubters of around 16%.

This most-shorted stock’s bearish base may arguably see Livent’s chances for continued growth as limited. There’s competition from larger outfits like Albemarle (NYSE:ALB) and Sociedad Quimica y Minera de Chile SA (NYSE:SQM). Also, what drives EVs today may not prove critical tomorrow.

Still, without getting ahead of ourselves and accepting a promising situation in LTHM for the foreseeable future, this most-shorted stock looks interesting.

Add in a $3 billion market cap, healthy but not unsettling short-interest and a bullish lifetime cup-shaped base with high-handle consolidation, it’s time to try some of this just right, most-shorted stock with a January $22.50/$30 bull call spread.

On the date of publication, Chris Tyler does not hold (either directly or indirectly) positions in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2021/07/3-most-shorted-stocks-to-buy-that-are-just-right/.

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