For those looking for short-squeeze stocks to buy, I would first like to let you know a few key things. These are the types of stocks that retail investors chase for big-time returns, and while it is up to you to decide what you do with your money, I would still warn that steering clear of companies that have very high dilution and cash burn is usually the smart move. Relentless equity offerings combined with reverse splits will render your holdings worthless the vast majority of the time.

That said, a few short-squeeze stocks are still viable bets. These stocks haven’t seen much dilution and are likely to survive the current market cycle. Investing in these names may not yield astronomical returns in one day, but 1,000% gains or more are possible in the next 12-24 months if the stars align.

Carvana (CVNA)

Carvana (NYSE:CVNA) has actually been one of my biggest wins so far. I wrote about Carvana twice back in April 2023. The stock has delivered nearly 1,000% in gains since then. Now, is this performance likely to repeat from here? No, I don’t think it is possible in the short-term. However, I do think that Carvana can still deliver multibagger returns within the next few years if key tailwinds keep propelling it higher.

Shares spiked over 35% after Carvana smashed earnings estimates by 13.6% on the top line and by 131% on the bottom line. The company is actually profitable now, and it expects even better days ahead. Indeed, my long-term conviction has only gotten better from here. 

I believe as rates come down, the company will likely become more and more profitable in the coming quarters, riding favorable market conditions higher. Alongside improved profitability, I expect sales to rise too, considering the rising age of many civilian vehicles in the U.S. The average car is nearly 13 years old, and many people cannot afford to buy new cars, turning to used car retailers like Carvana.

The short interest in CVNA stock is nearly 33%, which could potentially fuel a short squeeze if the bulls continue to charge.

Upstart (UPST)

Upstart (NASDAQ:UPST) is another big win of mine, but this stock has since given up some of its gains. I wrote about this stock around the same time I started covering Carvana. This stock was up around 250% at one point, but it has since declined dramatically, still up around 20% from its trough.

However, my conviction in this stock remains just as strong going forward. As I have argued many times before, the problems with Upstart aren’t really an Upstart problem. It’s more of a problem with the banking industry. Big banking institutions are hesitant to try out new tech, especially technologies as unreliable as AI. Even though Upstart claims its credit risk capabilities are better than traditional methodologies, banks are generally not in the mood to fiddle around.

That said, I don’t think this situation will remain forever. Once interest rates come and the storm passes, we should see many more partnerships through which Upstart would be able to expand. The company is expected to break even next year, and the company has been recovering in terms of revenue quite quickly.

A big beat like Carvana’s could send UPST stock soaring, potentially igniting a short squeeze.

Luminar Technologies (LAZR)

Luminar Technologies (NASDAQ:LAZR) hasn’t fared well, and I would admit that this company is likely my biggest flop. Regardless, there’s not much you can do with high-risk, high-reward stocks like these, and losses should be expected.

However, I still think this company is a very good long-term hold. Luminar is losing a lot of money right now, but it’s also a company that’s steadily shifting towards profitability. The company supplies lidar technology, which is better than cameras and radar, for robots and self-driving vehicles. I expect a windfall in the automotive industry once interest rate cuts commence, and that should drive up demand significantly for Luminar’s cutting-edge technology.

Lidar costs are also coming down, and many automakers are now experimenting with the tech. Analysts expect profits in 2027 and triple-digit revenue growth going forward, which could potentially set the stage for a massive short squeeze.

On the date of publication, Omor Ibne Ehsan 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.