5 High Short Interest Stocks Getting Squeezed With Upside To Go

April 05, 2024 at 09:25 AM EDT

Short Squeeze Stock Market

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

Cummins Short-Sellers Are Selling Into The Rally

Cummins (NYSE: CMI) short-sellers are selling into the rally despite the stock setting a new high on solid results and outlook. The stock still provides value at 16X this year’s earnings, and although a small earnings contraction is expected for F2024, a pivot back to growth is expected with the turn of the next fiscal year. The dividend is rock solid at 2.28%, growing, and reliable.

The latest increase is the 18th consecutive and sets the company up to become a Dividend Aristocrat by the decade's end. That’s a tailwind for price action to aid the share price for the next six years. Analysts rate the stock at Hold but lead the market higher with revisions. The consensus lags the price action by 7%, but the freshest targets since the last report are above it. The stock price may pull back from its current levels, but the dip, if it comes, would be an attractive entry point.

CMI stock chart

Canadian Natural Resources Could Double In Price

Short-sellers are selling into the Canadian Natural Resources (NYSE: CNQ) rally despite the technical outlook, which suggests the stock price could double again from current levels. The market broke out of a bullish triangle to the upside following a $60 rally, which suggests a $60 to 200% upward movement. The market is supported by the expectation for flattish results this year, a potentially cautious outlook, and a pivot back to growth next year.

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

CNQ stock price chart

Super Micro Computer Inc. Rockets Higher on AI Boost

Super Micro Computer (NASDAQ: SMCI) is rocketing higher on a boost from AI. The boost has the value surging to above 40% and the short-interest high, but the value is based on this year’s earnings. The benefit from AI will be seen fully next year when the outlook has valuation falling to 30X and back in line with leading tech plays. The consensus price target lags the market, but analysts are bullish. They rate the stock as a Moderate Buy and have raised their price targets. The freshest targets imply more than 1000 basis points of upside at the range’s low end; the new high target suggests another 50% upside.

SMCI stock chart

T-Mobile US Short-Sellers Are Closing Positions

T-Mobile's (NASDAQ: TMUS) short interest runs about 5% but was higher. The latest report shows short interest is falling, likely 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 as a Buy and are leading the market higher with revisions. The consensus assumes 15% at the midpoint, the low end of the range supports the current action, and the consensus is rising.

TMUS stock chart

General Motors Signals a Market Reversal

General Motors (NYSE: GM) short interest is falling but still high enough at the last report for short-covering to aid upward movement in the price action. Technically, the stock price recently broke above critical resistance, signaling a market reversal that should lead it higher. Analysts rate General Motors as a Moderate Buy with a 15% upside at the consensus, and revisions support the market.

GM stock chart