- GameStop (NYSE:GME) is still a meme favorite and demonstrating pattern and price strength
- Beyond Meat (NASDAQ:BYND) is a longer-term bear killing chart pattern
- Block (SQ) is mistakenly one of the market’s most-heavily shorted by dollar value
Bad actors from here, there and everywhere got the better of Wall Street this past week. Yet amid the mostly bearish underpinnings, three of the market’s most-shorted stocks are revealing themselves to be big-time buys.
Take your pick of what’s stoking the bears. Worrisome economic data in the Producer Price Index. Spiking Treasury yields. A mixed to mostly disappointing start to earnings season from names like JPMorgan & Chase (NYSE:JPM). Putin. Or a still very problematic Covid-19 still taking human lives and roiling the global supply chain.
There were plenty of reasons for investors to seek cover and de-risk portfolios in front of the Good Friday market holiday. And the selling pressure has taken a confirmed rally which emerged one month ago on March 16 and put it at risk of turning into a bearish, failed follow-through day event.
While avoiding the risk of getting ahead of ourselves, but also appreciating that the most-shorted stocks in the market of any group can trade to the beat of their own drummer, let’s look at three companies revealing themselves as more certain buying opportunities.
| GME | GameStop Corp. | $150.77 |
| BYND | Beyond Meat, Inc. | $43.01 |
| SQ | Block, Inc. | $121.31 |
Most-Shorted Stocks To Buy: GameStop (GME)
Source: Charts by TradingView
GameStop is the first of our most-shorted stocks to buy.
The turnaround bricks-and-mortar and online gaming play needs little to no introduction after becoming the poster child for this past year’s meme stock, short-squeeze movement. And today GME shares look poised for a powerful, albeit not as epic rally, once again.
This most-shorted stock’s shares aren’t at the extreme levels of 140% short interest which helped GME become a household name overnight among traders and most anyone with a newsfeed as it raced to gains of around 2,600% in less than three weeks.
But 27% of shares held short is certain fuel for bulls. And if there’s any one stock capable of being left to its own devices and trading bullishly higher, this most-shorted stock is probably a strong candidate with its still very active Reddit base on r/WallStreetBets.
There’s a move by GME stock’s management to receive split approval from its board. That could be bullish for shares.
Moreover and today, following a successful pullback test of this most-shorted stock’s 50% retracement level from the past month’s rally and stochastics signaling an oversold bullish crossover—it’s game on for bullish buyers!
Beyond Meat (BYND)
Source: Charts by TradingView
Beyond Meat is the next of our most-shorted stocks to buy.
BYND stock is one the market’s leading faux meats plays. And the outfit’s healthy eating alternatives just became a bit easier for folks to access. This week Beyond Meat announced the distribution of its Beyond Chicken Tenders to 8,000 new retail outlets.
As InvestorPlace contributor Cristian Docan recently noted, the product push isn’t likely to make a healthy dent in this most-shorted stock’s fundamentals, which have unsurprisingly deteriorated amid Covid-19.
But looking past today’s challenged operating environment in this most-shorted stock, heavy short interest of around 40% and a ‘finger licking good’ price chart, BYND stock is one to watch for buying.
Bottom-line and not the one buried in red ink at the moment, in recognizing the market’s ability to be a forward-looking price mechanism, I’m upbeat that it’s okay to nibble on BYND stock’s lifetime triple bottoming pattern with a further out January $50/$65 bull call spread.
Most-Shorted Stocks To Buy: Block, Inc. (SQ)
Source: Charts by TradingView
Block, Inc. is the last of our most-shorted stocks to buy. Classically, I haven’t saved the best for last, but it’s certainly the biggest in other ways and maybe the most contentious of the group.
Shares of SQ only sport about 8% short interest and less than the 10% threshold many traders use in putting together watch lists of heavily shorted stocks to buy or sell.
Importantly, though, this most-shorted stock candidate does provide a favorable days-to-cover ratio of two days. Also, given SQ stock’s $71 billion market cap, the stock’s ‘dollar volume sold short’ figure of about $6 billion makes it worthy of making the grade. And in our estimation that substantial bet has also overstayed its welcome mat.
As a most-shorted stock to buy, Block looks very attractive following late February’s earnings topper reaffirming the fintech is a market force to be reckoned with.
Further and today, trading off a historically low sales multiple of less than four times and a ‘baby with the bathwater’ style price chart offering investors the chance to buy SQ at a modest discount to last month’s well-supported monthly hammer pattern confirmation—this is a most-shorted stock to buy today!
On the date of publication, Chris Tyler 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.
