In this article, we discuss 5 best short squeeze stocks to buy now. If you want to see more stocks like these, check out 15 Best Short Squeeze Stocks to Buy Now.
5. Avaya Holdings Corp. (NYSE:AVYA)
Number of Hedge Fund Holders: 27
Short Interest as of September 14: 33.13%
Avaya Holdings Corp. (NYSE:AVYA) is a North Carolina-based company that provides digital communications products and services for businesses worldwide. On September 6, Avaya Holdings Corp. (NYSE:AVYA) announced a number of cost-reduction steps, including layoffs. A reduction in the workforce will result in $250 million in annual cost cutting. Redditors are piling into Avaya Holdings Corp. (NYSE:AVYA) as short interest increases, making it one of the best short squeeze stocks to buy now.
On August 10, Barclays analyst Ryan MacWilliams lowered the price target on Avaya Holdings Corp. (NYSE:AVYA) to 50c from $2 and reaffirmed an Underweight rating on the shares after the preliminary FQ3 results. The analyst believes lower subscription bookings and capex license revenues could “compound investor worries” around Avaya Holdings Corp. (NYSE:AVYA)’s business momentum.
Among the hedge funds tracked by Insider Monkey, Alta Fundamental Advisers is a notable position holder in Avaya Holdings Corp. (NYSE:AVYA) as of June 2022, with 2.8 million shares worth $6.18 million. Overall, 27 hedge funds were bullish on Avaya Holdings Corp. (NYSE:AVYA) at the end of Q2 2022, compared to 24 funds in the last quarter.
Here is what Voss Capital has to say about Avaya Holdings Corp. (NYSE:AVYA) in its Q4 2021 investor letter:
“Avaya is an American multinational technology company headquartered in Durham, North Carolina, that specializes in cloud communications and work stream collaboration solutions. Avaya is a “legacy” tech player undergoing a material business model transition from perpetual license and maintenance to a cloud and subscription model. The company has amassed a giant enterprise customer base in their Telephony (100 million seats) and Contact Center (6 million seats, ~40% global market share) businesses. Avaya is working to rapidly convert these customers to a subscription model while also moving as many as possible to public and private cloud infrastructures.
Converting a customer to subscription on its own provides an over 20% uplift in recurring revenue but moving them to public and private clouds gives a far more substantial uplift as the customer is able to generate significant savings from the move. i Management has guided to $1 billion in Annual Recurring Revenue from transitioning to subscriptions/cloud by the end of this year and $2 billion by fiscal year 2024 (versus $620 million now). We believe the buy side is skeptical of these numbers given the valuation and recent collapse in the stock. Putting aside the fact that the company has raised their ARR estimates each of the last four quarters, what finally convinced us they are making tangible progress in converting large cloud customers (as opposed to just subscription) was a $400 million, seven-year win with a “major financial institution” in Q4 for Contact Center as a Service (CCaaS).ii We believe this came in at roughly $125/month/seat which, if extrapolated to the rest of their Contact Center base, would give them a $9 billion ARR TAM. Keep in mind that this estimation is just considering their existing customer base and does not even include the 100 million Telephony users. The company only needs to convert a small percentage of its current base to cloud to achieve its stated $2 billion ARR target…” (Click here to see the full text)
4. Cassava Sciences, Inc. (NASDAQ:SAVA)
Number of Hedge Fund Holders: 2
Short Interest as of September 14: 33.17%
Cassava Sciences, Inc. (NASDAQ:SAVA) was incorporated in 1998 and is based in Austin, Texas. It is a clinical stage biotechnology company that develops drugs for neurodegenerative diseases. On August 23, Cassava Sciences, Inc. (NASDAQ:SAVA)’s director Richard Barry bought 36,160 shares priced at $23.79 each for a total consideration of $860,000. His ownership now equals 186,159 shares. Amid rising short interest, Cassava Sciences, Inc. (NASDAQ:SAVA) is one of the best short squeeze stocks to buy now.
On August 11, B. Riley analyst Mayank Mamtani lowered the price target on Cassava Sciences, Inc. (NASDAQ:SAVA) to $44 from $58 and kept a Buy rating on the shares after the company’s Q2 update. Phase 3 trials have now started and dosed 400 patients, up from 120 enrolled in Q1 2022, noted the analyst. He noted that the ongoing investigation of scientific collaborator Dr. Wang “remains a key overhang”.
According to Insider Monkey’s data, Shashin Shah’s Think Investments and Ken Griffin’s Citadel Investment Group held stakes worth $1.88 million and $266,000 in Cassava Sciences, Inc. (NASDAQ:SAVA) at the end of the second quarter of 2022.
3. Beyond Meat, Inc. (NASDAQ:BYND)
Number of Hedge Fund Holders: 20
Short Interest as of September 14: 40.47%
Beyond Meat, Inc. (NASDAQ:BYND) is a California-based company that manufactures and markets plant-based meat products in the United States and internationally. In late September, the company suspended its COO after he was arrested, and a few days later, Beyond Meat, Inc. (NASDAQ:BYND)’s chief supply officer also left to pursue another opportunity after less than a year on the job. As of September 14, the short float came in at about 40.5%.
On September 22, Canaccord analyst Bobby Burleson lowered the price target on Beyond Meat, Inc. (NASDAQ:BYND) to $22 from $30 and maintained a Hold rating on the shares. The analyst acknowledged the suspension of Beyond Meat, Inc. (NASDAQ:BYND)’s COO but trimmed his target due to ongoing elevated competition and slow demand for plant-based meat, which challenged the company’s growth.
According to Insider Monkey’s database, 20 hedge funds held stakes worth $73 million in Beyond Meat, Inc. (NASDAQ:BYND) at the end of June 2022, compared to 23 funds in the prior quarter worth $121.8 million. D E Shaw is a significant stakeholder of the company, with 970,537 shares valued at $23.2 million.
Here is what Horos Asset Management has to say about Beyond Meat, Inc. (NASDAQ:BYND) in its Q1 2022 investor letter:
“What about the other asset class that has attracted the most attention from the investment community in recent times? Beyond Meat is the other company whose valuations we did not understand and whose share price has also declined drastically in the last year and a half.”
2. Big Lots, Inc. (NYSE:BIG)
Number of Hedge Fund Holders: 14
Short Interest as of September 14: 61.55%
Big Lots, Inc. (NYSE:BIG) operates as a discount home goods retailer in the United States. For the second quarter of 2022, the company posted a non-GAAP loss per share of 2.28 and a revenue of $1.35 billion, topping market estimates by $0.19 and $10 million, respectively. The revenue declined 7.5% on a year-over-year basis. Comparable sales dropped 9.2% in Q2 2022. It is one of the best short squeeze stocks to buy now, with shorted float reaching 61.5% as of September 14.
On September 16, JPMorgan analyst Matthew Boss raised the price target on Big Lots, Inc. (NYSE:BIG) to $9 from $8 and kept an Underweight rating on the shares. The analyst established December 2023 price targets across his coverage. Consumer and retail CEOs remain “tempered” on H2 2022 expectations given the difficult macroeconomic environment, but almost every company showed signs of “improvement” in August compared to June levels, the analyst told investors in a research note.
According to Insider Monkey’s data, 14 hedge funds were long Big Lots, Inc. (NYSE:BIG) at the end of Q2 2022, compared to 12 funds in the previous quarter. Mill Road Capital Management is the leading stakeholder of the company, with 1.5 million shares worth $30.6 million.
1. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 14
Short Interest as of September 14: 104.15%
Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock recently experienced a massive boost induced by a short squeeze, but shares plummeted harshly as investor Ryan Cohen dumped his entire stake in the company. High short interest and a rally driven by retail investors led the stock to a five-month high of $30 by 17 August, 2022. However, it is trading under $10 now. Redditors are backing the stock still and they seem ready to overpower short sellers. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is one of the best short squeeze stocks to buy now.
On September 30, Odeon Capital analyst Alexander Arnold upgraded Bed Bath & Beyond Inc. (NASDAQ:BBBY) to Hold from Sell with an unchanged price target of $7.50. There were “no real surprises” in the company’s fiscal Q2 results and while the analyst contended that Bed Bath & Beyond Inc. (NASDAQ:BBBY) is “not out of the woods just yet,” things “appear to be moving in the right direction.”
According to Insider Monkey’s data, Bed Bath & Beyond Inc. (NASDAQ:BBBY) was part of 14 hedge fund portfolios at the end of June 2022, compared to 15 in the last quarter. Ken Griffin’s Citadel Investment Group is the largest shareholder of the company, with 2.30 million shares worth $11.45 million.
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