|Bid||12.54 x 1000|
|Ask||12.55 x 800|
|Day's Range||12.41 - 13.09|
|52 Week Range||11.85 - 29.48|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
The GameStop (NYSE:GME) short squeeze fiasco is perhaps one of the biggest stock market stories so far this year. And while it appears wild price swings are fading, Reddit traders are making a run at other shorted stocks. That means we haven’t seen the last of such events. For those who don’t know, short selling is a trading strategy where investors speculate on a particular stock’s expected price decline. The short interest indicates the total number of shorted shares that haven’t been covered or closed out.InvestorPlace - Stock Market News, Stock Advice & Trading Tips 9 Cheap Stocks That Look Like a Bargain Typically, a high short interest percentage points to investor pessimism. If that percentage exceeds 30%, a sizeable proportion of investors feel that the shares will go down in value. In GameStop’s case, Reddit’s army of retail investors bought GME stock to move the stock price higher, forcing traders that had bet on the price to fall to buy more shares at higher prices to limit their losses. That, of course, sends the stock price up some more. Though short squeeze events have happened in the past, the Reddit squeeze of GameStop was unique in its length and circumstances. Let’s look at three of the most shorted stocks of the year so far: Root Insurance (NASDAQ:ROOT) Rocket Companies (NYSE:RKT) Tanger Factory Outlet Centers (NYSE:SKT) Shorted Stocks: Root Insurance (ROOT) Source: Jirsak / Shutterstock.com Shares of technology-based car insurance Root Insurance have had a torrid time at the market, losing more than 40% of their value over the last month. Additionally, the percentage of its shorted float exceeds 50%. Root claims it can disrupt the car insurance business with its effective use of telematics. However, the reality is that many of its competitors are doing the same, leaving ROOT stock with no real catalyst at this point. Root Insurance feels that most of its competitors suffer from the “innovators dilemma,” which has hampered their evolution. It feels that it offers customers superior service through “usage-based” auto insurance premiums using telematics. However, many of its competitors, including Liberty Mutual, Progressive (NYSE:PGR) and others, invest heavily in their telematics capabilities. Additionally, with Root’s business model, the average loss ratio is incredibly high at over 70%. Regulatory risks also exist with telematics due to customer concerns about their data being collected. Hence, the company needs to evolve its business model for long-term sustainability. Rocket Companies (RKT) Source: Lori Butcher / Shutterstock.com Rocket Companies is a Detroit-based independent mortgage banker that failed to impress investors despite its stellar quarterly performances. On top of that, the percentage of its shorted float is roughly 40%. The company’s problem is its inability to scale costs and the lack of long-term growth prospects effectively. Much of the demand for mortgages should dry up this year. The Federal Reserve will continue to keep interest rates low for the foreseeable future, with treasury rates hovering near 1%. Hence, the room for expansion in the market is shrinking at a considerable pace. Headwinds from federal eviction, foreclosures, and forbearance periods are also weighing in on RKT stock. Furthermore, the claims of Rocket being a tech company do not add up. One of the features of tech companies is their ability to scale and create more products without incurring massive variable costs. It doesn’t seem to be the case with Rocket, which bears significant borrowing and employee costs that can hardly be automated. Therefore, it’s a rocky road ahead for RKT stock at this point. Tanger Factory Outlet Centers (SKT) Source: Ritu Manoj Jethani / Shutterstock.com Tanger Factory Outlet Centers is a retail real estate investment trust that operates upscale operating centers in the U.S. and Canada. Despite the challenges faced during the pandemic, SKT stock has grown at a healthy 53% in the last three months. Now in 2021, it has a challenging outlook as occupancy levels have dropped to their lowest point in three decades. Moreover, the mid-point of this year’s core FFO is lower than the 2020 reported figure. With considerable downside risk, and short interest of roughly 33%, SKT stock is a remarkably risky bet. The company posted strong fourth-quarter results marked by a healthy increase in traffic levels and rent collection to its credit. Revenues and FFO beat analyst estimates handsomely, with traffic numbers improving to 90% of prior-year levels. However, guidance on same center occupancy and net operating income is unclear, and the midpoint of core FFO for 2021 is lower than 2020. Therefore, 2021 should be another rough year for the company. On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post 3 of the Most Shorted Stocks of 2021 So Far appeared first on InvestorPlace.
Never say that one person makes no difference. This past Thursday, stocks tumbled, bonds surged, and investors started taking inflationary risks seriously – all because one guy said what he thinks. Jerome Powell, chair of the Federal Reserve, held a press conference at which he gave both the good and the bad. He stated, again, his belief that the COVID vaccination program will allow a full reopening of the economy, and that we’ll see a resurgence in the job market. That’s the good news. The bad news, we’ll also likely see consumer prices go up in the short term – inflation. And when inflation starts rising, so do interest rates – and that’s when stocks typically slide. We’re not there yet, but the specter of it was enough this past week to put serious pressure on the stock markets. However, as the market retreat has pushed many stocks to rock-bottom prices, several Wall Street analysts believe that now may be the time to buy in. These analysts have identified three tickers whose current share prices land close to their 52-week lows. Noting that each is set to take back off on an upward trajectory, the analysts see an attractive entry point. Not to mention each has earned a Moderate or Strong Buy consensus rating, according to TipRanks database. Alteryx (AYX) We’ll start with Alteryx, an analytic software company based in California that takes advantage of the great changes brought by the information age. Data has become a commodity and an asset, and more than ever, companies now need the ability to collect, collate, sort, and analyze reams of raw information. This is exactly what Alteryx’s products allow, and the company has built on that need. In Q4, the company reported net income of 32 cents per share on $160.5 million in total revenues, beating consensus estimates. The company reported good news on the liquidity front, too, with $1 billion in cash available as of Dec 31, up 2.5% the prior year. In Q4, operating cash flow reached $58.5 million, crushing the year-before figure of $20.7 million. However, investors were wary of the lower-than-expected guidance. The company forecasted a range of between $104 million to $107 million in revenue, compared to $119 million analysts had expected. The stock tumbled 16% after the report. That was magnified by the general market turndown at the same time. Overall, AYX is down ~46% over the past 52 months. Yet, the recent sell-off could be an opportunity as the business remains sound amid these challenging times, according to 5-star analyst Daniel Ives, of Wedbush. “We still believe the company is well positioned to capture market share in the nearly ~$50B analytics, business intelligence, and data preparation market with its code-friendly end-to-end data prep and analytics platform once pandemic pressures subside…. The revenue beat was due to a product mix that tilted towards upfront revenue recognition, an improvement in churn rates and an improvement in customer spending trends," Ives opined. Ives’ comments back his Outperform (i.e. Buy) rating, and his $150 price target implies a one-year upside of 89% for the stock. (To watch Ives’ track record, click here) Overall, the 13 analyst recent reviews on Alteryx, breaking down to 10 Buys and 3 Holds, give the stock a Strong Buy analyst consensus rating. Shares are selling for $79.25 and have an average price target of $150.45. (See AYX stock analysis on TipRanks) Root, Inc. (ROOT) Switching over to the insurance sector, we’ll look at Root. This insurance company interacts with customers through its app, acting more like a tech company than a car insurance provider. But it works because the way customers interact with businesses is changing. Root also uses data analytics to set rates for customers, basing fees and premiums on measurable and measured metrics of how a customer actually drives. It’s a personalized version of car insurance, fit for the digital age. Root has also been expanding its model to the renters insurance market. Root has been trading publicly for just 4 months; the company IPO'd back in October, and it’s currently down 50% since it hit the markets. In its Q4 and Full-year 2020 results, Root showed solid gains in direct premiums, although the company still reports a net loss. For the quarter, the direct earnings premiums rose 30% year-over-year to $155 million. For all of 2020, that metric gained 71% to reach $605 million. The full-year net loss was $14.2 million. Truist's 5-star analyst Youssef Squali covers Root, and he sees the company maneuvering to preserve a favorable outlook this year and next. “ROOT's mgt continues to refine its growth strategy two quarters post IPO, and 4Q20 results/2021 outlook reflects such a process... They believe their stepped-up marketing investment should lead to accelerating policy count growth as the year progresses and provide a substantial tailwind heading into 2022. To us, this seems part of a deliberate strategy to marginally shift the balance between topline growth and profitability slightly more in favor of the latter,” Squali noted. Squali’s rating on the stock is a Buy, and his $24 price target suggests a 95% upside in the months ahead. (To watch Squali’s track record, click here) Shares in Root are selling for $12.30 each, and the average target of $22 indicates a possible upside of ~79% by year’s end. There are 5 reviews on record, including 3 to Buy and 2 to Hold, making the analyst consensus a Moderate Buy. (See ROOT stock analysis on TipRanks) Arco Platform, Ltd. (ARCE) The shift to online and remote work hasn’t just impacted the workplace. Around the world, schools and students have also had to adapt. Arco Platform is a Brazilian educational company offering content, technology, supplemental programs, and specialized services to school clients in Brazil. The company boasts over 5,400 schools on its client list, with programs and products in classrooms from kindergarten through high school – and over 405,000 students using Arco Platform learning tools. Arco will report 4Q20 and full year 2020 results later this month – but a look at the company’s November Q3 release is instructive. The company described 2020 as a “testament to the resilience of our business.” By the numbers, Arco reported strong revenue gains in 2020 – no surprise, considering the move to remote learning. Quarterly revenue of 208.7 million Brazilian reals (US$36.66 million) was up 196% year-over-year, while the top line for the first 9 months of the year, at 705.2 million reals (US$123.85 million) was up 117% yoy. Earnings for educational companies can vary through the school year, depending on the school vacation schedule. The third quarter is typically Arco’s worst of the year, with a net loss – and 2020 was no exception. But, the Q3 net loss was only 9 US cents per share – a huge improvement from the 53-cent loss reported in 3Q19. Mr. Market chopped off 38% of the company’s stock price over the past 12 months. One analyst, however, thinks this lower stock price could offer new investors an opportunity to get into ARCE on the cheap. Credit Suisse's Daniel Federle rates ARCE an Outperform (i.e. Buy) along with a $55 price target. This figure implies a 12-month upside potential of ~67%. (To watch Federle’s track record, click here) Federle is confident that the company is positioned for the next leg of growth, noting: "[The] company is structurally solid and moving in the right direction and... any eventual weak operating data point is macro related rather than any issue related to the company. We continue with the view that growth will return to its regular trajectory once COVID effects dissipate.” Turning to expansionary plans, Federle noted, “Arco mentioned that it is within their plans to launch a product focused on the B2C market, likely already in 2021. The product will be focused on offering courses (e.g. test preps) directly to students. It is important to note that this product will not be a substitute for learning systems, rather a complement. Potential success obtained in the B2C market is an upside risk to our estimates.” There are only two reviews on record for Arco, although both of them are Buys, making the analyst consensus here a Moderate Buy. Shares are trading for $33.73 and have an average price target of $51, which suggests a 51% upside from that level. (See ARCE stock analysis on TipRanks) To find good ideas for beaten-down stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Investors need to pay close attention to Root stock based on the movements in the options market lately.