Quick Read
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Symbotic (SYM) trades at a $41B valuation with short interest above 33% of float despite recent 15% pullback from highs.
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Kohl’s (KSS) stock surged 156% over six months and beat earnings while trading at 9.0x trailing P/E with short interest above 32%.
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Lyft (LYFT) faces robotaxi competition as a number-two ride-hailer with short interest under 17% and trades at 19.3x forward P/E.
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Some investors get rich while others struggle because they never learned there are two completely different strategies to building wealth. Don’t make the same mistake, learn about both here.
It’s seldom a good idea to buy shares of a company just because you’re looking for a short squeeze. Though pursuing stocks with above-average short interest could grant you a shot at outsized returns if ever share price momentum becomes too much for the shorts to handle, as they cover and run to the hills, I think investors should prioritize the quality of the underlying business first and foremost.
After that, it can make sense to view high short interest as a bonus, especially if we’re talking about a hard-hit firm that you view as undervalued with catalysts that are timely to cause a spike in the share price at some point down the road. Whether that’s in the form of a positive earnings report or progress in a strategic turnaround plan, there are ample reasons to go against the shorts, as you hope for a short squeeze but invest with the long term at the top of mind.
In this piece, we’ll have a closer look at three names that have pretty high short interest that might be worth picking up as a value buy.
Symbiotic
Symbiotic (NASDAQ:SYM) shares have seen considerable short interest of late, to the magnitude of over 33% of float. That’s some serious short activity, especially for a stock that’s been so hot over the past year. Thus far, the shorts have had their way with the warehouse automation firm, with shares tanking 10% on Thursday, putting them down close to 15% from all-time highs. Undoubtedly, the $41 billion robotics firm is a growth sensation, but it’s likely that the valuation is a tad too excessive for many. Combined with its overexposure to one big client, it’s not a mystery why the shorts are betting on a dip.
Personally, I wouldn’t bet against the highly-shorted name on the way down, especially as the warehouse robotics revolution continues to play out in big retail. In short, I’d much rather be long than short, given the growth potential behind its impressive tech and the potential for shorts to feel a squeeze should shares find a way to power higher again. Of all the high-tech innovators with short interest, Symbiotic has to be one of my favorites.
Kohl’s
Red-hot meme stock Kohl’s (NYSE:KSS) has seen its short interest of float rise above 32% in recent weeks. The stock is up a scorching 156% in the past six months, and while the momentum has slowed, the hefty short interest might make the $1.8 billion retailer a candidate for another upside surge, especially if meme traders get more active in response to the shorts. As always, shorting is a dangerous game, especially given the risk of a squeeze.
At 9.0 times trailing price-to-earnings (P/E), Kohl’s is actually intriguing after its latest earnings beat. The company is being managed “with great discipline,” and that might be able to give the bulls something to get behind other than the high short interest.
Lyft
Lyft (NASDAQ:LYFT) has short interest on less than 17% of its float, but it’s still an interesting name to consider while it’s fresh off some tough quarterly results. Undoubtedly, Lyft is a number-two ride-hailer, and that’s highly unlikely to change anytime soon. With the rise of robotaxis, the Lyft business model is bound to change. And while management is optimistic about what the robotaxi rollout means for Lyft, I’m more skeptical.
The $8.6 billion firm seems more or less fairly valued, and while Lyft is less compelling as a short candidate compared to Kohl’s or Symbiotic, I continue to find it an interesting name if you’re a fan of the future of human-driven ride-sharing, which, I think won’t be going away just because we’ll all have the option to hail a robotaxi.
It’ll take time to warm up to driverless, and in the meantime, Lyft might be a great bet at 19.3 times forward P/E. If Lyft can make a big splash in robotaxis, I think there’s squeeze potential.