The short-squeeze trade has really taken off this year. GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) were some of the earliest stocks to benefit from these squeeze trades, but penny stocks weren’t far behind.
GameStop and AMC took short-sellers to the cleaners. These names, particularly GME stock, were circulating all over Reddit, as investors were clamoring on the r/WallStreetBets sub thread and elsewhere about the upside potential should they truly generate a squeeze.
It ultimately generated the mother of all short squeezes.
Some hedge funds were on the ropes as GameStop exploded more than 2,400% in just a few weeks. It was the talk of Wall Street, as everyone (and every algo) was seemingly piling in on the shorts’ pain.
It didn’t take long, though, for investors to start looking elsewhere, either. Investors were scouring Reddit, short-interest screeners and penny stocks looking for the next names to pop. While the most recent moves have been less violent and shorter in duration, we’re still seeing these moves play out.
Let’s look at seven penny stocks that could fire off next:
- Ocugen (NASDAQ:OCGN)
- Aterian (NASDAQ:ATER)
- Vinco Ventures (NASDAQ:BBIG)
- Workhorse (NASDAQ:WKHS)
- Lordstown Motors (NASDAQ:RIDE)
- Clovis Oncology (NASDAQ:CLVS)
- SmileDirectClub (NASDAQ:SDC)
Penny Stock With Squeeze Potential: Ocugen (OCGN)
Ocugen looked like it was about to come to life a few days ago. On Sept. 13, shares rallied over 22% at one point and closed higher by 15.8% on the day. While the stock is holding onto some of those gains, it’s still fighting a key downtrend resistance mark that was recently highlighted.
Bulls have been camping in this one, waiting for some type of explosive move to the upside.
Since its debut in December 2014, OCGN stock has seen far better days, as it has fallen significantly over the years. Even recently, the stock is down over 60% from a February high. It doesn’t help that the company is forecast to generate zero revenue this year and lose 28 cents per share.
However, it has some promising work in the pipeline, while its Covid-19 vaccine developed with Bharat Biotech could help generate additional sales. It’s even proved to do rather well against the Delta variant.
Combined with its 26.3% short interest and any more positive news could help spur this one higher.
Anyone who is an active trader has surely seen Aterian come across the discussion boards lately. You may have previously known is as Mohawk Group Holdings.
On Aug. 7, shares plunged 33% on the day on a poor reception to earnings. It didn’t help matters that the stock was down 83% coming into that report, either. Shares ultimately fell in nine out of 11 sessions before bottoming at $3.04. It didn’t take long for the short-squeeze traders to get a hold of this one.
Recently topping out at $19.10, ATER stock logged a gain of almost 500% at this month’s high. While not technically a penny stock at the moment, that doesn’t mean this one can’t go flying higher again.
With a short interest of 36.1% and a borrow rate of about 100%, this one has some potential to squeeze higher. Short interest climbed roughly 50% from its levels in mid-July, as investors keep an eye on this one.
Penny Stock With Squeeze Potential: Vinco Ventures (BBIG)
Not long ago, the Top Stock Trades column took a look at Vinco Ventures, as the share price rocketed from $2 to $12. Amid that move, BBIG stock made a perfect move to a technical extension level and has since pulled back. Now back near $6, investors are wondering if BBIG stock can make another large move to the upside.
The stock may have a short interest of almost 50%, making it prone to potential squeezes any time a wave of buyers come into the stock. Although shares are down notably from the highs — pulling back by almost 50% — there’s still some short-squeeze fuel left in the tank should bulls make a run.
It helps that Vinco Ventures isn’t very big either, with a market capitalization of less than $500 million. Of course, that figure is up considerably since the stock’s run from $2.
However, here’s the tough thing: There are no analysts’ estimates for this stock.
In the last 12 months though, Vinco Ventures has done just under $14 million in sales and is not profitable. On the plus side, it does have an ample cash and equivalents position of $75 million and a low debt level.
Workhorse stock has not been trading very well. Shares are down more than 55% from the June high and down more than 80% from the 2021 high. It’s been a brutal stretch, highlighted by issues with the United States Postal Service (USPS).
Essentially, the company was hopeful that it would win a major contract with the USPS. In that scenario, Workhorse would supply the logistics operator with new vehicles for its aging fleet.
That didn’t happen and as those hopes have taken a hit, so, too, has the stock price. Near $8 and the stock isn’t all that far off from its low in May when it bottomed at $7.07. Combined with a short interest north of 36%, this is one that could catch a serious bid if investors come snooping around for another short-squeeze candidate.
Any sort of meaningful traction or momentum could get WKHS stock moving. While analysts are perhaps a bit too optimistic, they’re still forecasting most than $110 million in revenue next year.
Penny Stock With Squeeze Potential: Lordstown Motors (RIDE)
Sticking with the EV space here for a minute, Lordstown Motors is like most of its peers. Shares have been buried over the past few months, as RIDE stock is down almost 60% from its June high and is down almost 80% in the past year.
With a market capitalization of just $1.2 billion, Lordstown is actually one of the smaller plays in the EV space.
Analysts expect just $69 million in sales this year, which won’t do much to alleviate the critiques of its valuation. However, 2022 could be a different story. Consensus expectations call for $1.29 billion in revenue next year. If it comes to fruition, it could make RIDE stock one of the cheaper stocks out there among its peers. At least when measured on a price-to-sales basis.
Further, it has a short interest of about 26%, which could make it ripe for a squeeze higher. While the EV stocks aren’t exactly thriving at the moment, we have seen some positive momentum in Tesla (NASDAQ:TSLA), as well as a recent surge in Lucid Motors (NASDAQ:LCID).
Who knows, perhaps Lordstown is next.
Clovis Oncology (CLVS)
From a bottom-line perspective, Clovis Oncology has not been doing too well. However, the situation is improving and forecast to continue improving. The company lost $4.38 per share last year and is forecast to cut those losses in half this year. In 2022, analysts expect Clovis to generate a loss of “just” $1.34 a share.
Of course, these are estimates and anything can change between now and the end of next year. However, Clovis appears to be on the right path. As for revenue, growth is slightly negative this year, but forecast to jump almost 35% next year to $213 million.
For a company with a market cap of just $525 million, that’s a significant revenue figure.
Now throw in a sub-$5 stock price and a short interest of 23% and we may have a short-squeeze candidate in the making. Earlier this year, CLVS stock cleared the $10 per share mark, but last month it made fresh 2021 lows.
If other Reddit names start to find a bid in the next few months, it will be hard to ignore Clovis as a possible squeeze candidate.
Penny Stock With Squeeze Potential: SmileDirectClub (SDC)
SmileDirectClub started off with so much promise, but it has since faded significantly over the years. The stock debuted around $20 per share in September 2019.
However, it closed under $14 in its first few weeks of trading, losing about one-third of its opening-price value. In fact, the stock went on to lose more than 60% of its value as it fell for the first five months of its public existence. Shares of SmileDirectClub also fell in seven of its first eight months of trading.
After starting off 2021 on a better note, shares topped around $16 and have now pulled back into the $6 range. While SDC made a recent low of $4.63 in August, it avoided last year’s lows (ironically from August 2020).
Could that set the stock up for some upside?
SmileDirectClub has a short interest of about 33%, which makes it a prime short-squeeze trade if the group takes off again. Obviously this one comes with plenty of risk — as do all of these stocks — but if the stock can hang in above $4.60, a move to the upside is always possible.
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Read More: Penny Stocks — How to Profit Without Gettting Scammed
On the date of publication, Bret Kenwell 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.