Looking for hot stocks to buy now in a bear market may seem a risky decision. But investment opportunities always exist that can deliver positive, risk-adjusted returns.
But what is the definition of hot stocks to buy now for our purposes in this article?
These stocks, to be considered hot, should have characteristics such as attractive valuation, growth, profitability, and momentum. The following three stocks have all these features plus they have high chances of a short squeeze that could send their prices to higher levels.
Investing in stocks that could have a short squeeze ignoring their fundamentals is a reckless and naïve investment decision. Always check for arguments that are backed with facts, not just opinions.
| HZO | MarineMax | $39.16 |
| ARCH | Arch Resources | $138.80 |
| M | Macy’s | $17.92 |
MarineMax (HZO)
MarineMax (NYSE:HZO) is a boat and yacht retailer that can help you find a boat to buy, finance it and service your boat. The stock is down nearly 37% in 2022 and has a Short % of Float (as of June 15, 2022) of 19.68% and a Short Ratio of 9.28.
The HZO stock has a PEG GAAP (TTM) of 0.10, a Price / Sales (FWD) ratio of 0.38X, and a P/E GAAP (FWD) of 4.7X.
The profitability is strong with a Net Income Margin (TTM) of 7.51%, and an EBITA Margin (TTM) of 10.99%. Trading at a PE Ratio (TTM) of 4.66 makes this stock very cheap.
The one-year target estimate is $52.43 or a potential upside of 41%. The latest earnings report was a very strong one with a beat on both EPS and on revenue.
The sales growth is great too.
Arch Resources (ARCH)
Arch Resources (NYSE:ARCH) is a premium producer of metallurgical products. The stock is up 66% in 2022 and has declined nearly 6% in the past month. The Short % of Float (as of June 15, 2022) is 21.04% and the Short Ratio is 4.07.
Why short a stock with such strong fundamentals is a mystery. The firm in 2021 reported a sales growth of 50.26% to $2.21 billion and turned profitable with a net income of $337.57 million, a growth of 197.96%.
The EBIT Margin (TTM) of 25.53%, the Net Income Margin (TTM) of 22.93%, and the Return on Common Equity (TTM) of 102.10% make this stock a value stock.
The P/E GAAP (FWD) of 1.92X and Price/Sales (FWD) of 1.01X is also very supportive. If you think analysts are right, then the 1-year estimate of $204 could deliver gains of 35%.
Macy’s (M)
Macy’s (NYSE:M) a retailer selling electronics, cosmetics, and apparel among other products has seen its shares decline 28% year-to-date. The stock has a Short % of Float (June 15, 2022) of 17.18% and a Short Ratio of 2.08.
The Q1 of FY 2023 was a strong one for Macy’s beating both the EPS and revenue estimates.
The EPS GAAP figure of $0.98 was a beat by $0.16 and revenue of $5.35 billion was a beat by $14.32 million. The Gross Profit Margin (TTM) of 41.08%, the EBIT Margin (TTM) of 9.73%, and the Net Income Margin (TTM) of 6.21% are very positive for such a mature business.
The M stock has a Price / Sales (FWD) ratio of 0.21X which is very cheap, and it offers a forward dividend yield of 3.25%.
In FY 2022 sales growth was +39.76% to $25.29 billion and net income surged 136.26% to $1.43 billion.
On the date of publication, Stavros Georgiadis, CFA 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.
