Trading heavily shorted stocks can be a profitable strategy. That’s because traders and institutions that short the stock will have to cover their short positions by buying back the stock in case it starts rallying. This increases demand for the company shares, thus increasing the price.

Because the interest for shorted stocks remains, Finbold analyzed the most shorted stocks this year and selected the two with a high potential to soar.

Bullfrog AI Holdings (NASDAQ: BFRG)

Bullfrog AI is a digital biopharmaceutical company focused on using artificial intelligence/machine learning analysis of data sets in medicine and healthcare.

The company recently revealed that it has secured a patent for drugs designed to treat cancer. Regardless, BFRG’s short interest stands at 43% of float, making it one of the most shorted stocks at the moment.

Meanwhile, Morningstar’s quantitative equity report has put a fair value estimate at $7.15, 100% above the current market price of $3.56.

Morningstar quantitative equity report. Source: Interactive Brokers Fundamentals Explorer

The company information is vague and it’s an extremely risky bet. But if the stock price starts rising and shorts rush to cover their positions, it could move beyond Morningstar’s fair value estimate. 

Fisker (NASDAQ: FSR)

Fisker is a California-based electric vehicle manufacturer that currently sells only one car — Fisker Ocean, an all-electric SUV. More vehicles are in the pipeline, though, like the Ronin sports car and the Alaska lightweight pick-up truck.

This stock has a 25% of float shares shorted. We already listed Fisker as a company to avoid trading in June since the company recently trimmed its production outlook on top of inflationary pressures. But if you’re looking for a risky short-squeeze bet, this could be it.

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Five analysts on TipRanks have initiated a ‘hold’ rating with a price target of $8.50 in the next 12 months. That’s 52% above the current stock price of $5.59 per share.

TipRanks analyst consensus. Source: Interactive Brokers Fundamentals Explorer

Fisker is down 18% year to date, while Bullfrog AI is down 45% during the same period. Both are outperformed by the S&P 500’s 16% return. 

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

The post Short squeeze alert for August 16th: Two stocks with high potential to soar appeared first on Finbold.

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Dennis is a business and financial writer, who had spent almost his entire life independently reporting on different business ventures with major impact on the US and global economy. Dennis places a special focus on examining tech stocks, biotech stocks all while investing a great part of his early hours to researching and writing on the companies in the US markets. Dennis has 15+ years of experience in financial markets.