When it comes to finding penny stocks to buy or add to your watch list, I’m sure you look for themes. It might be companies that just released news. Maybe it’s the latest round of penny stocks with insider buying. On the other hand, it could have something to do with the newest patent or FDA approval that hasn’t quite hit the market’s radar yet.
These are all very active themes to follow right now. Another popular trend making its way through the ranks: stocks with higher short interest. These are companies that many have bet against for one reason or another. In hopes of capitalizing on a downturn in the market, they short these stocks.
What Is Shorting? In simple terms, shorting is when a trader borrows shares from their broker and sells them into the open market. How do short traders make money? Since the shares sold were loaned to the short seller, that person is responsible for returning the same amount of shares back to the broker. It doesn’t matter the price per share; the broker needs their shares returned in a certain amount of time. So a successful short sees a short seller repurchasing shares at a lower price, paying back their loan, and pocketing the difference between the selling price and the repurchase price.
What is a short squeeze? It’s all fun and games until short sellers have to buy back at higher prices because a stock doesn’t drop. Instead, stocks can rally for one reason or another, as I’m sure you’ve seen. As price climbs, short-sellers get squeezed out of their position. The added buying can compound the aggressiveness of a bull trend. As a result, short squeeze stocks can experience explosive moves.
Short Squeeze Penny Stocks To Watch
Today we look at a handful of penny stocks with higher short interest. However, a caveat to this is that high short interest doesn’t always equate to a squeeze. In many cases, stocks can continue lower as the short bet prevails.
- Nuzee Inc. (NASDAQ: NUZE)
- Adverum Biotechnologies (NASDAQ: ADVM)
- TOMI Environmental Solutions (NASDAQ: TOMZ)
- Aterian Inc. (NASDAQ: ATER)
Nuzee Inc. (NASDAQ: NUZE)
Nuzee is one of the companies we’ve discussed for a few weeks. The original interest came after its update last month. Nuzee is a co-packing company, and as dull as that may sound, one of the partners it manufactures for seems to have helped raise some awareness around the company.
Recent NUZE Stock News
Despite the play on words in this portion of the article, there is some Nuzee news to keep in mind. Last month, the company announced that its manufacturing partner, Cuvée Coffee, expanded into over 3,000 Walmart stores nationwide. Nuzee is responsible for single-serve coffee formats. As a result, this broadens the reach of Nuzee as a copacker.
Is NUZE One Of The Short Squeeze Penny Stocks To Buy?
The short float percentage on NUZE stock, according to Fintel, sits around 3% right now. However, since it is such a small company with a lower float, it has been on the volatility watch list for some. Data also shows that the borrow fee rate is on the high end with a low “days to cover” figure. With that in mind, NUZE could be one of the penny stocks to watch.
Adverum Biotechnologies (NASDAQ: ADVM)
Adverum’s year hasn’t been much to talk about this year. It has gone from a company with shares trading above $14 to barely treading water over $1.60. That’s likely one of the reasons why there’s short interest in the penny stock, to begin with. Regardless, it continues developing its gene therapy platform for ocular and rare diseases.
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The company’s ADVM-022 is an injected treatment for patients with wet age-related macular degeneration currently in clinical trials. Earlier this quarter, data showed that ADVM-022 provided durability and had a “promising” safety profile. There’s a plan to complete data analysis by the end of this year and develop a protocol with investigator & regulatory feedback on a Phase 2 trial evaluating ADVM-022 at low doses.
Is ADVM One Of The Short Squeeze Penny Stocks To Buy?
If you look at some of the latest data from Fintel, you’ll see it has a short float percentage of 9.32%. With proposed developments slated for the end of the year, it will be interesting if the company fulfills its plan before 2022.
TOMI Environmental Solutions (NASDAQ: TOMZ)
Another one of the penny stocks with an interesting short data profile is TOMI Environmental. The company has been on the radar after its big spike at the end of November. The new virus variant is running rampant, with traders speculating on a specific set of stocks. TOMI specializes in decontamination and infection prevention by providing disinfectant products.
Recent TOMZ Stock News
Earlier this month, TOMI announced the launch of its SteraMist products on Amazon. The SterMist Amazon Store features the SteraPak disinfection system for mechanical disinfection in residential homes, commercial buildings, and other at-risk locales prone to germs. Dr. Halden Shane, CEO of TOMI, commented, “As new pathogens emerge, including the new variant of SARS CoV-2 Omicron and the deadly C. auris fungus, continue to spread around the world, disinfection is deemed critical, and SteraMist is here to stop the spread.”
Is TOMZ One Of The Short Squeeze Penny Stocks To Buy?
Like ADVM, TOMZ stock doesn’t have the highest short float percentage at 3%. However, according to Fintel, the borrow fee rate is relatively high, along with the “days to cover” being relatively low. With the rise of covid concern, it will be interesting to see what happens next with TOMI Environmental following new developments from places like the United Kingdom regarding the virus.
Aterian Inc. (NASDAQ: ATER)
Aterian is no stranger to momentum-fueled breakouts. The penny stock broke out big during the summer thanks to a mix of higher short interest and optimism surrounding specific corporate updates. Aterian specializes in eCommerce tech leveraging its Artificial Intelligence Marketplace Ecommerce Engine or “AIMEE” platform. AIMEE uses artificial intelligence and data analytics to manage products at scale across online marketplaces, including Shopify, Amazon, and Walmart.
Recent ATER Stock News
This week Aterian announced another key development. The company entered into a strategic online partnership with RecurrentVentures. The collaboration sees the two combining forces to promote products through affiliate marketing and co-branding.
“We look forward to working closely with the Recurrent team to drive more sales to Aterian’s existing brands through Recurrent’s portfolio of online editorial publications reaching over 60 million monthly unique visitors. We are particularly excited also about the potential prospect of launching co-branded products designed through our data driven methodology and promoted through Recurrent’s channels.”
Yaniv Sarig, Chief Executive Officer.
Is ATER One Of The Short Squeeze Penny Stocks To Buy?
According to Fintel data, ATER stock has a short float percentage sitting around 27%. There aren’t any extreme borrow fee rates or days to cover. However, this percentage is higher than it was a month ago. That’s something to keep in mind if ATER is on your list of penny stocks to watch right now.
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Are Short Squeeze Penny Stocks Good?
Regardless of your feelings on short-sellers, there’s plenty to account for when looking for potential short squeeze stocks. I’m not only talking about the numbers themselves – IE short float, days to cover, borrow fee, etc. – but also the market make-up as well. Can short squeezes trigger? Of course, but when or if they do, the volatility in the market can be massive. In many cases, the squeeze can last for a short period, and stocks can drop just as quickly as they rose. So if you’re looking for short squeeze stocks today, make sure you take the first step in understanding how to handle market volatility.
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