Trading short squeeze stocks was one of the main strategies during the meme stock mania in 2021. Those who managed to get in before the short squeeze started were highly rewarded.
This strategy, however, still holds true. But you have to find the right stock.
Given the interest that remains around heavily shorted stocks, Finbold analyzed the most shorted stocks this year and selected the two that have the most potential to keep going.
Carvana (NYSE: CVNA) is an online used car retailer that lets you fully complete the process of purchasing, including trade-in and financing, without physically going to the car dealership.
What makes this stock interesting is that it has already been short-squeezed by a lot, making a staggering 1,018% return year-to-date. Despite that, Carvana is still one of the most-shorted stocks with 47% of float shorted as of June.
This means it could still go higher as shorts have to cover their position eventually.
However, analysts on TipRanks have an average price target of $37 for the next 12 months and a hold rating, which is below the current price of $51.
TipRanks analyst ratings. Source: Interactive Brokers Fundamentals Explorer
C3.ai (NYSE: AI) is a pure-play AI stock that provides AI software solutions to businesses. This includes tools to accelerate software development, reduce expenditures and provide a generative AI suite to customers.
This stock isn’t as shorted as Carvana, but it’s up there with a close to 35% short interest as of June. A short squeeze combined with an AI frenzy this year has made the stock skyrocket 254% year to date. Given Carvana returned 1,018% this year, the C3.ai stock price could have more potential to grow if it follows a similar trajectory.
Currently, the stock trades at $39, and three analysts have set their price target at $40 in July.
Refinitiv analyst ratings. Source: Interactive Brokers Fundamentals Explorer
Notably, in eight months, these two stocks have outperformed the S&P 500’s 17% return, which is interesting to note as S&P 500 is trading near new highs.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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