While everyone knows that in order to have a market, there must be bulls and bears, that’s not going to stop people from attempting to garner intense profits from top short-squeeze candidates. To quickly summarize, shorting stocks involves borrowing shares to initiate the “negative” position. At some point, though, those borrowed shares must be returned. For the bears, they can be returned either at a profit or a loss.
Now, in order to panic the bears into buying back their borrowed shares before they rise too much, contrarian bulls can deliberately bid up negatively targeted securities. Therefore, the top short-squeeze candidates offer an incredibly lucrative opportunity to make big money quickly. Still, it’s important to remember the cardinal rule about this contrarian practice: flawed companies usually attract heavy short interest.
As a bull, even if you make money on your trade, you probably don’t want to hang around too long. Otherwise, your fellow bulls might dump shares on you. Nevertheless, if you’ve got the urge to gamble, these are the top short-squeeze candidates to watch in Feb.
Elys Game Technology
Elys Game Technology (ELYS)
Source: Epic Cure / Shutterstock
Based in Toronto, Canada, Elys Game Technology (NASDAQ:ELYS) delivers a true state-of-the-art betting platform, capable of processing any type of digital game content, per its website. Based on data from Benzinga, Elys’ current short interest stands at 11% of the float. Now, that’s really nothing in and of itself. However, the change in the short interest jumped 571% recently, making it one of the short-squeeze candidates to watch.
Moreover, Fintel reports that, based on its proprietary Short Squeeze Score, ELYS pings at 90.98. Ranging from 0 to 100, higher numbers reflect a greater risk of a short squeeze relative to peers. Moreover, the investment resource states that short shares availability – or the number of shares of ELYS available to be shorted at a leading prime brokerage – is zero (at the time of writing).
Finally, another reason why Elys ranks among the short-squeeze candidates to watch centers on its sole analyst’s assessment. Rating it a buy, the market expert also anticipates a $2 price tag. That implies an upside potential of over 212%.
Soleno Therapeutics (SLNO)
Source: Zurijeta / Shutterstock.com
Based in Redwood City, California, Soleno Therapeutics (NASDAQ:SLNO) develops novel therapeutics for the treatment of rare diseases. In the trailing year, SLNO took a beating, losing 48% of its equity value. Not surprisingly, then, it attracted unwanted attention. Per Benzinga, SLNO features a short interest of 35.7% of the float. This tally represents a 498% lift from the last short interest reading.
According to Fintel, Soleno’s Short Squeeze Score stands at 89.22. As well, the investment resource notes that SLNO features elevated short borrow fee rates. While the rate dipped from its recent high of 108.27%, it’s still up in the stratosphere at 83.52%.
What’s going to be problematic for the bears is if the sole covering analyst for Soleno turns out to be prescient. Currently, the expert rates SLNO as a buy along with a massive price target of $8. This implies an upside potential of nearly 189% from the time of writing. Therefore, SLNO needs to be on your radar for short-squeeze candidates to watch.
Kala Pharmaceuticals (KALA)
A clinical-stage biopharmaceutical company, Kala Pharmaceuticals (NASDAQ:KALA) dedicates itself to the research, development, and commercialization of innovative therapies for rare diseases of the eye. Though relevant from a scientific perspective, KALA struggled in 2022. In the trailing year, shares dropped 60% in equity value. Unfortunately, this attracted the bears, with KALA currently pinging a short interest of 28.1%.
Now, that’s not the biggest short-interest metric we’ve seen. However, it represents a 389% increase from the last reading of this particular stat. Per Fintel, the biopharma’s Short Squeeze Score reached 98.67, a staggeringly high figure. Moreover, its short shares availability metric moved all over the map recently. Though it presently stands at 20,000 shares, it used to be zero mere days ago.
Presently, two analysts cover KALA, with an average consensus view of moderate buy. However, there’s nothing moderate about their average price target of $29.50. This implies an upside potential of nearly 67%, imposing pressure on the bulls. Therefore, KALA represents one of the short-squeeze candidates to watch.
Sitio Royalties (STR)
Source: Freedom365day / Shutterstock.com
A hydrocarbon energy asset firm, Sitio Royalties (NYSE:STR) focuses on investing in mineral and royalty interests in the Permian and other productive U.S. oil basins. In the trailing year, STR gained nearly 27% of its equity value. By itself, that doesn’t make it one of the short-squeeze candidates to watch. However, it’s possible the bears may anticipate the energy narrative to fade in 2023.
Currently, Sitio features a short interest of 55.75% of the float. Also, its short-interest ratio is 11.4 days to cover. Fundamentally, though, Sitio bulls could be making a huge mistake. With China reopening its economy recently, this catalyst should bolster energy prices, not deflate them. Still, the bears insist on their position, making STR one of the short-squeeze candidates to watch.
Indeed, another massive dilemma for STR short traders centers on Wall Street’s assessment. Presently, analysts rate STR as a consensus (and unanimous) strong buy. Also, their average price target of $35 implies an upside potential of over 33%. Thus, STR’s one of the short-squeeze candidates to watch.
Gossamer Bio (GOSS)
Source: Chompoo Suriyo / Shutterstock.com
Based in California, Gossamer Bio (NASDAQ:GOSS) may be one of the short-squeeze candidates for justifiable reasons. Long story short, Gossamer encountered clinical disappointments. In the trailing year, GOSS hemorrhaged an alarming 75% of its equity value. In terms of lifetime performance as a public entity, it gave up nearly 87%.
Sure enough, the bears smelled blood and targeted GOSS for downside. Currently, the biotech’s short interest stands at 32.83%. In addition, its short-interest ratio pings at 4.9 days to cover. As Fintel pointed out, the company’s Short Squeeze Score hit 80.27.
Fundamentally, the main problem for short traders is that they’ll want to avoid being too greedy. Sure, circumstances don’t look great for Gossamer at the moment. However, the company still enjoys solid support on Wall Street. Presently, market experts rate GOSS as a consensus moderate buy. Also, their average price target stands at $7.22. As I’m writing these words, this forecast implies an upside potential of over 203%. Thus, GOSS easily ranks among the short-squeeze candidates to watch.
Headquartered in Boston, Massachusetts, Myomo (NYSEAMERICAN:MYO) specializes in advanced medical robotics technology. Specifically, its main product MyoPro is an electronically controlled brace that may help a user regain function in arms and hands paralyzed by a stroke, brachial plexus injury (BPI), cerebral palsy, or other neuromuscular disease or injury.
As relevant as it is scientifically, MYO represents a literal penny stock. Therefore, it’s not surprising that it makes the ranks of short-squeeze candidates to watch. Currently, Myomo features a short interest of 12.7% of the float. This figure jumped over 68% from the last reading. While it’s not the greatest magnitude of bearishness, keep in mind that MYO lost over 93% in the trailing year.
Almost certainly, the bears will be targeting MYO, making it one of the short-squeeze candidates to watch. At the same time, Myomo might not be a slam dunk for the pessimists. Right now, a sole analyst covers MYO, rating it a buy. Also, this expert anticipates shares jumping to $1.60 eventually, implying over 229% upside potential.
ORIC Pharmaceuticals (ORIC)
A San Francisco, California-based oncology specialist, ORIC Pharmaceuticals (NASDAQ:ORIC) aims to discover, develop and commercialize innovative therapies that address cancer resistance. Although a truly compelling enterprise, ORIC struggled mightily throughout 2022. In the trailing year, ORIC gave up 43% of equity value.
With such erosion, the bears naturally moved in. Currently, ORIC features a short interest of 13.1% of the float. This figure represents an increase of over 45% since the last reading. In addition, the stock’s Short Squeeze Score stood at 80.35, a very elevated figure. Therefore, it’s worth assessing as one of the short-squeeze stocks to watch. We could be in the early innings of speculation.
Still, any bears that may be thinking about shorting ORIC should note Wall Street’s take. Presently, two experts cover ORIC with a consensus view of moderate buy. Further, their average price target of $15.50 implies an upside potential of over 175%. Therefore, it’s one of the short-squeeze stocks to watch, if only for the brewing fireworks.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
More From InvestorPlace
The post 7 Top Short-Squeeze Candidates to Watch in February appeared first on InvestorPlace.