If you’re looking for different themes in the stock market today, the “short squeeze” has grown in popularity. It’s been a topic we’ve discussed for a few months related explicitly to penny stocks. But it has taken on a life of its own, even with higher-priced names. This makes plenty of sense, considering the significant attention initially sparked by companies like AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) earlier this year.
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The short squeezes were so epic that brokerages didn’t know how to handle it. Most famous (or infamous) was when Robinhood, a mobile-first brokerage limited trading, types of trades, and specific activities in several popular stocks, experienced massive short squeezes. Fast-forward to the last few months of the year, and this trend is still very apparent. For this reason, we’ll focus on penny stocks with high short interest, according to data from Fintel.
Why Does Short Interest Matter?
Short interest is something that some traders search for in hopes of catching a short squeeze. Explaining things in basic terms, when specific traders expect a stock’s price to decline, they short the stock.
This involves borrowing shares from their broker, selling those shares into the open market; then, once the stock has dropped, they repurchase shares at lower prices, return their borrow, and pocket the difference. The important thing about shorting is that it doesn’t matter the stock price; the same amount of shares borrowed must be returned in a specific period.
When there are many betting against a stock by shorting, we see higher levels of short interest. But if there is a squeeze, wherein the stock price goes up instead of down, this is where you’ll usually see massive price spikes like we did earlier this year. Those who are short still need to return shares, but instead of repurchasing at lower prices, they have to cover at higher prices, thus taking a loss. With short-covering and aggressive retail buying, a big move can ensue. Will that be the case for the names on this list of penny stocks, or will bearish bets win this battle?
Short Squeeze Stocks To Buy Under $5
- Invacare Corp. (NYSE:IVC)
- Ring Energy (NYSE:KING)
- Voyager Therapeutics (NASDAQ:VYGR)
- Aspira Women’s Health (NASDAQ:AWH)
- Solid Biosciences (NASDAQ:SLDB)
1. Invacare Corp. (NYSE:IVC)
Invacare has been under pressure for the better part of H2 2021. One of the most significant factors to consider is what happened at the end of summer. In its second-quarter update, the company slashed its guidance, which sent a shockwave across the market in September. IVC stock dropped from over $8 to eventual lows this week of $4.02. While the company said next year looks positive in terms of growth, traders are focused on near-term potential.
Invacare manufactures and distributes medical equipment for non-acute care settings. This includes products that help people move, rest, breathe, or even perform essential hygiene. Specialty wheelchairs, beds, mattresses, bathtub chairs & step stools, as well as powered mobile seating & scooters, are among the company’s long list of products.
Based on Q3 results posted at the end of October, there seems to have been a few improvements made so far. Invacare managed to beat on EPS and sales estimates for the quarter. CEO Matthew Monaghan also explained that “Similar to the second quarter, we continue to experience strong order intake and high demand for our products, resulting in a higher-order backlog compared to pre-pandemic levels. These favorable trends give us the confidence we will achieve sequential improvement in 4Q21, finishing the year on a strong note and building momentum as we head into 2022.”
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With this, there has been some optimism in recent sessions. As far as short interest goes, Fintel shows the short float percentage sitting at 31.38% as of this article.
2. Ring Energy (NYSE:REI)
Shares of Ring Energy have been red hot this year. After kicking things off in January at just $0.66, the energy penny stock has managed to rally to highs of $4.16 so far this quarter. This 530% move was paired with bullish sentiment in energy stocks and milestones reached by Ring Energy specifically.
With upcoming earnings next week, eyes are on performance once again. November 9 is when the company releases Q3 results. It will also host a conference call after the opening bell on November 10. These earnings come shortly after Roth Capital upgraded the penny stock to Buy and set a $4.75 price target.
Traders will likely wait to see if Ring can continue its growth that was seen in last quarter’s results. The energy company beat EPS and sales estimates for the quarter. In particular, the company set out to make the second half of 2021 memorable. Ring said in its last update that it “expects second half 2021 sales of 8,700 to 9,200 Boe/d (7,700 to 8,100 Bopd),” and “Assuming the successful completion and timing of the Company’s Phase III and Phase IV drilling programs, Ring expects to exit 2021 with sales volumes in excess of the high-end of second-half guidance.”
As far as short interest goes, Fintel shows a short interest as a percentage of Ring’s float, sitting at 17.79% right now.
3. Voyager Therapeutics (NASDAQ:VYGR)
We’ve discussed Voyager on another list of penny stocks with higher short interest. The company shocked traders late last quarter after announcing a license option agreement with Pfizer (NYSE:PFE). This was for novel capsids generated from Voyager’s Tracer screening technology. Overnight, VYGR stock went from 52-week lows of $2.46 to highs of $5.73 just a few days later. Analysts at Baird also upgraded the stock following this license deal. The firm boosted VYGR stock to Outperform and adjusted its $6 target higher to $9.
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The Pfizer deal alone could be a meaningful one for Voyager. The company already received a $30 million upfront payment. It’s also entitled to receive up to $20 million in exercise fees in aggregate for two options, exercisable by Pfizer within 12 months of signing. Voyager said that it is also eligible to earn up to $580 million in total based on certain milestones. None of this accounts for anything else the company has in the works either.
In its third-quarter update, Glenn Pierce, M.D., Ph.D., interim CSO of Voyager, explained that the company is also “advancing an innovative gene therapy pipeline leveraging our novel TRACER capsids. Preclinical data from our GBA1 gene replacement program illustrates the potential of a single-dose, IV-administered therapy to significantly raise target protein levels in the CNS, potentially impacting Parkinson’s disease, Lewy body dementia, and Gaucher disease.”
There’s an upcoming industry presentation later this month that Voyager participates in. The company will attend the Society for Neuro-Oncology 26th Annual Meeting, being held Nov. 18-21. As far as short interest, Fintel shows short float percentage sitting at 16.75% right now.
4. Aspira Women’s Health (NASDAQ:AWH)
Similar to Invacare, Aspira has also been under pressure during the second half of the year. The penny stock has dropped from over $5.50 to lows this quarter of $2.87. Since reaching those lows, AWH stock has made attempts to establish some levels. Heading into the end of the week, AWH has once again tested its 50-day moving average. This is the 3rd time this week that this has happened. Major technical levels like the 50 DMA tend to act as support and resistance in specific settings. In Aspira’s case, this technical level has remained a sticking point on its chart since July.
Some mixed earnings results and slower progress seem to have sucked some optimism out of the market over the last few months. However, that doesn’t mean there aren’t things to keep track of with AWH stock. In particular, a recent partnership with Genoox will see the companies develop and deliver information and tools to medical professionals to help address different health concerns for women.
Aspira CEO Valerie Palmieri explained that “with this partnership, we are one step closer to our goal of closing the gap in ovarian cancer risk assessment and developing solutions for pelvic diseases combining genomics with proteomics. We are honored to be working alongside Genoox in advancing women’s health.”
Next week could be an important one for the company. It delivers the next round of earnings for Q3. Additionally, if you’re looking for short float data, the percentage, according to Fintel right now, is 17.23%.
5. Solid Biosciences (NASDAQ:SLDB)
Solid Biosciences saw its fair share of bearish bets this year. Following highs of $11.58 during Q1, it’s been a constant decline for SLDB stock until recently. News of a steeply discounted share offering in March triggered the initial dip. Then adverse side-effects in one of its gene therapy patients undergoing treatment with SGT-001 in Duchenne muscular dystrophy sent shares lower. It was also considered a “serious” adverse event.
But, fast-forward to the last few months of the year, and sentiment seems to have turned around a bit. More specifically, the last few weeks have seen SLDB stock bounce from 52-week lows of $1.82 to recent highs of over $2.50. This comes as Solid reported a business update and filed Q3 results at the start of November.
Ilan Ganot, Chief Executive Officer, President and Co-Founder of Solid Biosciences, explained that the company “shared meaningful clinical data across a variety of endpoints from the ongoing IGNITE DMD clinical trial of SGT-001, which continue to guide our understanding of the potentially differentiated benefit that SGT-001 may offer to patients…As we prepare to dose additional patients in IGNITE DMD, we enter the fourth quarter with a great deal of excitement and momentum around our opportunities to improve outcomes for patients with Duchenne.”
In light of this move, some are looking at other data points, including short interest. According to Fintel data, the short float percentage for SLDB stock hovers around 17%.
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Penny Stocks & Short Squeezes
Like all investments, penny stocks carry plenty of risks. When you’re talking about ones with higher levels of short interest, you’ve got to look at all angles. Why is there higher short interest? What is the company doing to try to remedy any bearish trends? Are there any significant technical levels to keep track of if a squeeze triggers? These are just a few of the questions to ask. The point is that doing research is still necessary even after finding penny stocks with higher levels of short interest. Will any of these make it onto your list in November?