This is certainly one of the most intriguing markets we’ve seen in some time. Growth stocks are flying, as are valuations. Investors appear to be taking the “TINA” (there is no alternative) trade to the next level. Accordingly, this risk-on sentiment has bled into some of the more speculative short-squeeze stocks in the market.
Indeed, within the stock market, certain groups of stocks have outperformed others. Among the key winners in this risk-on environment have been meme stocks.
What defines a meme stock exactly remains a topic of debate. However, generally speaking, investors refer to meme stocks that have become ultra-popular on social media forums. These stocks tend to have high levels of short interest, making them susceptible to short-term swings in stock price, should enough buying pressure materialize to force short-sellers to cover (buy back the shares they borrowed and sold).
The rise of the retail investor has certainly re-shaped the investing landscape. Accordingly, investors are always on the lookout for stocks that have the ability to go on incredible runs.
With investors looking to replicate the performance of GameStop (NYSE:GME) or AMC Entertainment (NYSE:AMC), finding stocks with the right technical factors to squeeze has become ever-more important. Here are seven such stocks with tremendous retail investor interest right now:
- iRobot (NASDAQ:IRBT)
- Lemonade (NYSE:LMND)
- Big 5 Sporting Goods (NASDAQ:BGFV)
- Cassava Sciences (NASDAQ:SAVA)
- iStar (NYSE:STAR)
- Gogo (NASDAQ:GOGO)
- ZoomInfo Technologies (NASDAQ:ZI)
Top Short-Squeeze Stocks: iRobot (IRBT)
Robotics has been an increasingly popular sector for growth investors to target for obvious reasons. Among the companies that has garnered significant retail investor interest has been iRobot.
This U.S.-based robotics company serves a fast-growing segment of the tech market. This company designs and manufactures robots used for various consumer purposes. Among the company’s most popular products is the Roomba, a top-selling vacuum cleaner in the market. In addition to the consumer discretionary space, iRobot also has other products it’s working on with military applications.
We can all agree that automation of tedious chores is a good thing. Of course, the potential total available market for the robotics space could be huge. With proven winners in this sector already, iRobot is a company with impressive growth catalysts investors can rely on.
However, iRobot is also a company with very high short interest. Currently, this short interest sits at around 26%, significantly higher than the market, and up there with the most popular short-squeeze stocks. Accordingly, this is a company with a range of catalysts that’s starting to catch fire over the past week.
Moving away from robotics, New York-based Lemonade has a very different offering. Lemonade offers a range of insurance products to its clientele. Using big data and artificial intelligence technology, the company hopes to disrupt the traditional insurance sector. Among the insurance policies currently offered by Lemonade are home insurance, term life insurance, pet insurance and a range of other growing insurance businesses.
Accordingly, Lemonade is a company with a tremendous following as a disruptive innovator. However, like the other names on this list, Lemonade is also a target of retail investors due to the company’s relatively high short interest ratio. Currently, that number sits at around 35%, and is among the highest on this list. Accordingly, many investors point to this stock as a great short-squeeze candidate right now.
Of course, Lemonade’s valuation has something to do with its short interest level. This isn’t a cheap stock by any means. However, investors seeking a company with great long-term growth catalysts and a short-term potential technical setup for a squeeze will like this stock.
Top Short-Squeeze Stocks: Big 5 Sporting Goods (BGFV)
Another stock with impressive short interest gathering momentum in the markets is Big 5 Sporting Goods. Surprisingly, Big Five has performed quite well this year. This is a stock that has tripled on a year-to-date basis alone. And it’s a company that has outperformed a number of its high-profile peers of late.
That said, Big 5 is also a company that’s facing stiff competition from others in the sporting goods space. The company’s focus on outdoor activities such as golf, fishing, tennis and camping have boomed during a pandemic which saw most indoor-related recreational activities shut down.
This competitive environment has led to a rather high short interest of late, given how well this stock has performed over the past year. At the time of writing, this short interest ratio sat at around 43%. That’s meaningful, especially for retail investors seeking a potential short-squeeze stock.
Will Big 5 ultimately squeeze? Time will tell. However, for now, this is a stock I’m keeping on my watch list.
Cassava Sciences (SAVA)
One of the more speculative names on this list is Cassava Sciences. This biotech company has seen tremendous volatility this year. A series of spikes and declines have made the chart very hard to read on this biotech stock. And for good reason.
Cassava is a company currently developing a treatment for Alzheimer’s disease. Given the recent Food and Drug Administration approval of Aduhelm (aducanumab), companies putting forward prospective Alzheimer’s drugs are being viewed as speculative lottery ticket-like bets in the market.
Given the state of this bull market, it’s unsurprising to see this stock have a massive retail following. What’s also come along with this is a relatively high short interest ratio, around 25%.
Now, SAVA stock is likely to continue to be a volatile one from here. Any time there’s a company that’s valued on the basis of a binary outcome, there’s likely to be massive swings over time. For traders, this is a great thing.
Whether the company’s Simufilam drug gets approval or not will really be the driver of this company’s stock price over the medium-term. Those bullish on the company’s prospects may want to take a look. However, this stock is certainly not for the faint of heart.
Top Short-Squeeze Stocks: iStar (STAR)
The next stock investors are looking at as a short-squeeze candidate is iStar. Like the other names on this list, iStar boasts a relatively high short interest, around 23% at the time of writing. This short interest appears to be the result of a rather interesting business model.
Essentially, iStar is a real estate investment trust (REIT). However, unlike traditional REITs dealing with real property, iStar focuses on ground leases. These leases are typically used in the commercial real estate space, for those looking to lease land for up to 99 years.
The owner of the land gets access to the property for a multi-generational timeframe, without having to put up the capital for an outright purchase. This leasing business has done well as valuations in the real estate space have soared, though some believe this highly sensitive business could be under pressure, should rates be on the rise.
Right now, this company’s valuation and its technical fundamentals appear to be intriguing to speculators. Accordingly, those looking for a high-upside bet (with a higher risk profile) may want to take a look.
Another company with an interesting business model is Gogo. This internet connectivity provider to the aviation sector has a business model that’s one I haven’t looked at before. However, the demand for in-flight broadband connectivity is high, and this company’s market share in this space is impressive. Both commercial and business aircraft use Gogo’s services.
Given the return to pre-pandemic flight volumes, this stock has climbed more than 50% year-to-date in this year. However, a significant percentage of these gains came as a result of the company raising its long-term revenue guidance on Sept. 28.
As per the company’s latest financial reports, Gogo brought in revenue of more than $82 million. This represents an impressive 51% year-over-year growth rate. However, the company’s net loss widened to $66.4 million, as opposed to $14.2 million in the second quarter of 2020.
Gogo has forecasted revenue growth of approximately 15% from 2020 to 2025, up from its previous estimation of 10% annual growth. Moreover, the company is planning to wrap up its 5G network construction within 2022.
The stock of this company is likely to stay highly volatile as the news of emerging new virus variants continues to threaten the recovery of the travel industry. With a high short interest of 32.39%, GOGO stock appears to be one with intriguing upside, along with a short squeeze thesis that retail investors may like.
Top Short-Squeeze Stocks: ZoomInfo Technologies (ZI)
Not to be confused with Zoom Video Communications, ZoomInfo is a company providing market intelligence services to its global clientele. A range of tech-heavy solutions providing market insights based on the company’s cloud-based platform has created real value for its growing global customer base.
Last year, ZoomInfo debuted in the market as one of the largest tech IPOs of the year. With a valuation of more than $30 billion, ZoomInfo has seen its valuation nearly quadruple from its offering. That’s some impressive growth in just a couple years.
That said, this is a stock that has also been highly volatile this year. After dipping approximately 50% from its earlier highs this year, ZI stock surged 85% to its current levels. Right now, this stock is near its all-time highs, and is far from a heavily shorted stock.
However, this is a company with a steep valuation and a strong retail investor following. Accordingly, investors seeking a higher-risk, high-reward momentum stock may want to consider ZI stock among the short-squeeze stocks to buy right now.
On the date of publication, Chris MacDonald 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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.