5 high-short-interest stocks ripe for a squeeze

High short interest is a recipe for sharp stock price movements, and when shorts get squeezed, the movements can be the sharpest. The stocks on this list aren’t just high-short-interest stocks with upward pressure on prices; they are among the most shorted stocks listed on the Marketbeat platform, they offer some value, have positive market sentiment and a growth forecast. In many cases the squeeze is already active; in all cases, there is still an advantage for investors.

Cummins short sellers are selling into the rally

Cummins New York Stock Exchange: CMI Short sellers are selling into the rally despite the stock setting a new high on solid results and outlook. The stock still provides a value of 16 times this year’s earnings, and while a small earnings contraction is expected for 2024, a return to growth is expected by the end of the next fiscal year. The dividend is rock solid at 2.28%, growing and reliable.

The latest increase is the 18th in a row and sets the company up to become a Dividend Aristocrat by the end of the decade. This is a tailwind for price action to support the stock price for the next six years. Analysts rate the stock Hold but guide the market higher with revisions. The consensus lags price action by 7%, but the most recent targets since the last report are above that mark. The stock price could retreat from current levels, but the decline, if it were to occur, would be an attractive entry point.

The price of Canadian natural resources could double

Short sellers are selling in the Canadian natural resources NYSE:CNQ rally despite the technical outlook, which suggests the share price could double again from current levels. The market broke out of a bullish triangle to the upside after rallying to $60, which suggests a 60 to 200% upside move. The market is supported by the expectation of flat results this year, a potentially cautious outlook and a return to growth next year.

Since the stock trades at 12 times next year’s earnings and pays 3.5% yield, it’s a high value and high yield. You might think 12X is about right compared to other energy stocks, but the entire complex is undervalued based on future earnings potential. Analysts rate this stock a Hold and see it advancing 6% at the low end of the range, 16% in the consensus, and the consensus trending upward.

Super Micro Computer Inc. aims high with the enhancement of artificial intelligence

Supermicrocomputer NASDAQ:SMCI is increasing dramatically thanks to the push of artificial intelligence. The increase causes the value to rise above 40% and the short-term interest rate is high, but the value is based on this year’s earnings. The benefits from AI will be fully seen next year, when the outlook will see the valuation drop to 30X and return in line with major technology trends. The consensus price target lags the market, but analysts are bullish. They rate the stock a Moderate Buy and have increased their price targets. The most recent targets imply more than 1,000 basis points of upside at the low end of the range; the new high target suggests a further 50% upside.

Short sellers of T-Mobile in the United States are closing positions

T-Mobile NASDAQ:TMUS short interest is about 5%, but it used to be higher. The latest report shows that short interest is declining, probably lower now. The company expects growth this year and next, and the bar is set low for this 5-G winner. Analysts rate the stock a Buy and are guiding the market higher with revisions. The consensus assumes the mid-15% range, the lower end of the range supports the current action, and the consensus is rising.

General Motors reports a market reversal

General Motors NYSE:GM short interest is declining, but according to the latest report it is still high enough to allow short covering to help the price action move higher. Technically, the stock price recently broke above critical resistance, signaling a market reversal that should take it higher. Analysts rate General Motors a Moderate Buy with 15% upside to the consensus, and the revisions support the market.

Before you consider Super Micro Computer, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Super Micro Computer wasn’t on the list.

While Super Micro Computer currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here