5 Best Short Squeeze Stocks to Buy Now

2. Sunnova Energy International Inc. (NYSE:NOVA)

Number of Hedge Fund Shareholders: 27

Short Interest: 25%

Days to Cover: 5.4

Landing in second on our list of the best short squeeze stocks to buy now is Sunnova Energy International Inc. (NYSE:NOVA), which hedge funds have been hanging on to with a vice-like grip in recent quarters. The number of funds long NOVA has barely budged over the past two years, with Jos Shaver’s Electron Capital Partners and Steve Cohen’s Point72 Asset Management being some of the firm’s biggest bulls during that time.

Sunnova Energy International Inc. (NYSE:NOVA) shares have gained 25% since May 19 and are now up slightly year-to-date. Nonetheless, NOVA shares are only flat since late-April, when the company secured a $3 billion conditional partial loan guarantee from the Department of Energy to help expand its reach.

A week after that deal was announced, Truist raised its price target on Sunnova to $35 from $28, noting the company’s financial and competitive benefits, as well as its attractive valuation given that shares are trading at a 20% discount to the company’s net contracted customer value.

The ClearBridge Investments Small Cap Strategy discussed why Sunnova Energy International Inc. (NYSE:NOVA) benefited from the passage of the Inflation Reduction Act in its Q3 2022 investor letter:

“Within the utilities sector, solar power and energy storage company Sunnova (NYSE:NOVA) saw its share price benefit from passage of the Inflation Reduction Act legislation, which includes an array of new and extended tax credits that should not only support but enhance the company’s long-term growth prospects.”