business

7 short-term stocks that could take off in October 2022


Over the past year, the phenomenon of retail investors bidding on short-term stocks or securities with intense bearish sentiment has spread like wildfire. This year, circumstances have changed dramatically. As the Federal Reserve moved to raise the benchmark interest rate until inflation normalized, the framework for high-risk companies shrank.

Yet short-term stocks are powerful forces in the stock market. Theoretically, no upward limit exists for listed securities. Therefore, going short against a company could backfire infinitely, so to speak. To avoid such a catastrophic loss, bears caught on the wrong side of market sentiment will seek to hedge their trades. Naturally, this creates even more upside pressure, which benefits contrarian longs.

For this list of short-squeeze stocks, I specifically targeted companies listed in Fintel‘s Short-Squeeze Leaderboard. They all have a high percentage of short flutter and a high short ratio or days to hedge. In other words, it is best to target stocks where the bears face both volume and time pressure.

However, even with the best precautions, short-term actions are risky. Therefore, only participate with money that you can afford to lose.

DDS Dillard’s $288.41
BLNK flashing charging $18.17
TTCF tattooed cook $5.33
CWH camping world $25.74
WEBR Weber $6.22
RILY B. Riley Financial $49.26
GRPN let’s group $9.55

Dillard’s (DDS)

Source: JHVEPhoto/ShutterStock.com

On a list of 250 companies, the department store giant Dillard’s (NYSE:DDS) ranks as no. 81 among short-term stocks. DDS has a short float of 18.2% and 12 days to cover. Generally, a short percentage float of 10% or more and days to cover of 10% or more indicate a stronger downtrend than usual.

Interestingly, the bullish sentiment commanded Dillard earlier this year as it topped competitors in the department store segment. Year-to-date (YTD) through the September 21st session, DDS has gained nearly 19%. His closest rivals are far from positive territory for the year. In addition, it should be noted that the reference S&P500 the index has lost 21% since the start of the year.

Going forward, the potential deflationary risk posed by the Fed’s hawkish monetary policy poses major risks for DDS stocks. However, it’s also possible that certain social dynamics — like a full return to normal — could boost sales. Although a dangerously upsetting idea, it is possible for the bears to overshoot, making DDS one of the short-term stocks to consider.

Flashing Charge (BLNK)

a flashing charging station

Source: David Tonelson/Shutterstock.com

On paper and without any other context (particularly economic), flashing charging (NASDAQ:BLNK) should not be among short-term stocks. However, according to Fintel, BLNK arrives at no. 199. The underlying business – specializing in the provision of electric vehicle (EV) charging infrastructure – has a short float percentage of 24%. Moreover, his days to cover are nine.

As apparently everyone likes to say, the future of mobility is electric. In theory, this should help BLNK. Unfortunately, the problem is that EVs present an expensive profile. According to data from Kelley’s Blue Book earlier this year, a new electric vehicle averaged nearly $63,000. With median US household income not far off that number, few people can afford electric vehicles right now.

Yet looking to the future, dynamics such as economies of scale and improved efficiency could drive down the price of electric vehicles. If so, charging will be a necessity. Not all occupied dwellings have a garage or carport, which facilitates a large addressable market for Blink Charging. Therefore, BLNK could be an intriguing name among short-term stocks. However, a great deal of caution is required.

Tattooed Chef (TTCF)

Information about a Tattooed Chef acai bowl displayed on a phone.

Source: Spyro the Dragon / Shutterstock.com

Specializing in the development and distribution of convenient plant-based food products, tattooed cook (NASDAQ:TTCF) should resonate with younger people. Unfortunately for struggling stakeholders, the TTCF currently only resonates with bearish traders looking for a quick gain.

According Fintel, Tattooed Chef ranks no. 201 among short-term actions. TTCF has a short float percentage of 27.4% and 15 days to cover. This dynamic leaves little room for the bears to run or jump should the negative trade turn bad.

Of course, for a short pressure to materialize, Tattooed Chef must attract enough long traders to blow up the bears. Basically, young people, such as Millennials and Gen Z, usually care about sustainability issues. Research demonstrates that these age cohorts embrace plant-based meat products.

Yet, TTCF presents significant risks as there is only a limited amount of funds available for speculation. For the record, the TTCF has plunged almost 65% so far this year.

Camping World (CWH)

Camping World (CWH) logo on a smartphone in front of an American flag background.

Source: Igor Golovniov / Shutterstock.com

Back during the initial onslaught of the coronavirus pandemic, camping world (NYSE:CWH) represented one of the contrarian ideas, for obvious reasons. With a mysterious virus floating around, people who wanted to go on vacation and could afford it could travel safely via road trips.

These days, CWH is getting attention, but for the opposite reason. By Fintel, the recreational vehicle specialist ranks No. 1. 152 among short-term stocks. CWH exhibits a short percentage float of nearly 26% while commanding 10 days to cover. Essentially, as society gradually became less scared of Covid-19, Camping World’s bullish case diminished. Yet, is this the end of this contrarian narrative?

Flying in the new normal imposes myriad inconveniences such as canceled flights and massive crowds. Therefore, CWH might make a comeback although you should be careful with this thesis.

Weber (WEBR)

The New York Stock Exchange decorated for public trading by Weber Inc., a manufacturer of grills.  WBR Stock

Source: rblfmr/Shutterstock

Specializing in outdoor grills and related cooking equipment, Weber (NYSE:WEBR) basically suffered disproportionately during the initial outbreak of Covid-19. With government agencies cracking down on social mobility, backyard gatherings haven’t really flown for obvious reasons. However, in theory, the relaxation of government mandates and mitigation protocols should help WEBR.

For now, the underlying security is making the rounds in short-term stocks. Specifically, Fintel WEBR pegs like no. 31. The company has a short percentage float of 44.7% and 12 days to cover. Nevertheless, some opponents might be tempted to bid on WEBR, especially because of this massive short position.

From a broader perspective, it’s possible that Weber could benefit from the current troubling economic factors. As the broader economy swings between inflationary and deflationary forces, consumers might choose to avoid expensive restaurants. In doing so, the garden barbecue could make a comeback. Still, it’s one of the riskiest ideas among short-term stocks, so approach it cautiously (if at all).

B.Riley Financial (RILY)

a magnifying glass enlarges the B. Riley logo on a website

Source: Pavel Kapysh / Shutterstock.com

After the slump of spring 2020, B. Riley Financial (NASDAQ:RILY) has managed to post incredible returns, helping its investors through an extremely bullish cycle. Additionally, the company managed to underwrite several initial public offerings (IPOs) during the equally wild 2021 IPO cycle. However, with the arena of new public listings seemingly dying, the bears have started targeting RILY.

By Fintel‘s, B. Riley has a short percentage float of 17.9% and 8 days to cover. Basically, it’s not hard to see why many investors now have a low opinion of RILY. With the Fed pivoting the economy towards a more deflationary environment, investor sentiment fell significantly. Yet it is in deflation that financial services become relevant and valuable.

During periods of inflation, investors have to do something with their money because their purchasing power erodes. In times of deflation, purchasing power increases, which means that any investment opportunity must be extremely attractive. Given that B. Riley hires some of the best experts out there, this should be incredibly relevant. Yet, like other short-term stocks, RILY requires a cautious hand.

Groupon (GRPN)

a building displays a sign bearing the Groupon logo (GRPN)

Source: Ken Wolter/Shutterstock.com

In an earlier paradigm where social media networks weren’t as robust as they are today, let’s group (NASDAQ:GRPN) worked very well. However, as these networks improved, companies offering discounts to their customers no longer needed intermediary entities. Unfortunately, this dynamic left the GRPN reeling due to relevance issues.

At the time of this writing, Fintel ranks GRPN among the “best” short-term stocks, no. 69 to be exact. Groupon offers a short percentage float of 52.6% and nine days to cover. Inevitably, these moves will prompt at least a few bold naysayers to take an opposing bet to blast the bears. It could happen. However, I will recommend extreme caution.

In the most optimistic scenarios, consumers in financial difficulty may seek out deals. Since Groupon still features some brand cachet for its platform, this could help facilitate said transactions. However, this is an extremely competitive field, so potential market participants should exercise caution.

As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided critical and unique insights to investment markets, as well as various other industries including law, construction management and healthcare.

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