3 Stocks Set to Soar When the Bears Get Short-Squeezed

  • These three stocks are set to soar if short-squeeze rallies continue.
  • Sky Harbour Group (SKYH): Following the completion of its special purpose acquisition company (SPAC) merger, SKYH stock shot off like a rocket.
  • Nikola (NKLA): Nikola is actually climbing so far in 2023.
  • Stronghold Digital Mining (SDIG): A key filing could spur another momentum-driven rally in this crypto stock.
short-squeeze stocks - 3 Stocks Set to Soar When the Bears Get Short-Squeezed

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The search for high-growth stocks with the ability to outperform is on. Risk-on sentiment is thriving once again in the market, with the start of 2023 looking much different than last year. Accordingly, for those seeking stocks set to soar this year, the question is where to look?

Last year’s performance for growth stocks was horrendous. Even after recovering from October lows, many top growth stocks made new lows to end the year. Now, many experts expect this year to be lackluster, too. This is because many of the macro forces that were at play in 2022 are still alive and well — from inflation to interest rates and geopolitical issues.

However, there are reasons to be positive about 2023. Inflation may have peaked, leading to a pause (and maybe a pivot) from the Federal Reserve. Additionally, back-to-back down years in the markets are rare.

Notably, certain speculative stocks tied to short-squeeze catalysts have soared lately. Although these names are ultra-speculative in nature, traders or those with short-term time horizons may be intrigued by such opportunities.

So, where should you start your search? Here are three short-squeeze stocks set to soar for investors looking for more aggressive upside picks right now.

Short-Squeeze Stocks: Sky Harbour Group (SKYH)

A picture of a series of cubes stacked up to get taller as they go to the right, with the word SPAC on them. IPOF is a SPAC.
Source: Dmitry Demidovich/ShutterStock.com

One of the more interesting companies to make this list of stocks set to soar following a potential short squeeze is Sky Harbour Group (NYSEMKT:SKYH).

Sky Harbour went public in 2022 via a special-purpose acquisition company (SPAC) merger with Yellowstone Acquisition. The company rents out aviation hangars, a business which has been volatile of late due to the pandemic.

Sky Harbour is committed to creating a campus-like network of private hangars for corporate and private aircraft. The company intends to do this by leasing property at significant U.S. airfields under long-term ground leases. Sky Harbour will then create its own hangars for clientele from there.

Following the completion of its SPAC merger, shares of SKYH stock shot off like a rocket. The price of SKYH stock increased from less than $6 in February 2022 to as much as $43.41 in March. However, it dropped all the way back to $2.50 toward the end of 2022. Now trading around $4 per share, shares have seen some relatively impressive price action in recent weeks.

Much of this is due to the company’s relatively high short interest as a percentage of float. Currently, this figure sits around 35%, which is very high relative to most stocks in the market. There may be fundamental reasons for this high short interest. But in a market of surging short-squeeze stocks, Sky Harbour is certainly a name investors may want to watch.

Nikola (NKLA)

In the electric vehicle (EV) sector, plenty of investors believe their given investment will be among the stocks set to soar over a particular time frame. Unfortunately, EV truck maker Nikola (NASDAQ:NKLA) has been hit about as hard as any company in this space. In last one year alone, NKLA stock has lost more than 70% of its value.

So, why is NKLA stock on this list? After all, if there’s any company that’s probably deserving of high short interest, it’s Nikola. Founder Trevor Milton was found guilty of fraud last year and is now serving time. That makes Nikola difficult for many investors to get behind.

Well, in the short term, anything is possible. Traders and speculators have been rapidly picking up shares of NKLA to start the year. Now, the share price is up more than 17% year-to-date (YTD). That’s impressive performance, relative to other EV peers.

Certainly among the more speculative names on this list, NKLA stock could be poised for a nice near-term rally. While I personally don’t believe in and won’t invest in shares, the investment thesis among speculators is relatively easy to understand here.

Short-Squeeze Stocks: Stronghold Digital Mining (SDIG)

a digital graph overlayed over hands typing and a pile of crypto coins
Source: Shutterstock

The last entry on this list of stocks set to soar as potential short-squeeze plays is perhaps the most speculative of them all. As its name suggests, Stronghold Digital Mining (NASDAQ:SDIG) is a cryptocurrency mining firm focused on Bitcoin (BTC-USD).

Bitcoin mining operations have seen their profit margins squeezed hard in 2022. With BTC making fresh multi-year lows last year, companies like Stronghold that execute complex mathematical problems to mine the crypto have had their fundamentals taken for a nasty ride. As a result, the company has been heavily shorted, with around 25% of the float currently sold short.

That said, there are reasons for the recent rally in SDIG stock. Putting aside the impressive surge in crypto valuations, Stronghold has some catalysts of its own. For example, the company recently disclosed that it had entered into an exchange agreement with the holders of its Amended and Restated 10% Notes. Under this agreement, the entire outstanding principal amount of debt and interest totaling approximately $17.9 million will be cancelled in exchange for shares of convertible preferred stock having a “face value of approximately $23.1 million.”

At a conversion price of 4o cents per share, the Series C Preferred Stock will be convertible into shares of the company’s Class A common stock “or pre-funded warrants that may be exercised for shares of Class A common stock.”

With this in mind, Stronghold Digital’s balance sheet could be on the mend in short order. So, SDIG stock may be one of the short-squeeze stocks worth watching in the weeks to come.

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On the date of publication, Chris MacDonald did not hold (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.


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