One of the hottest trends in the stock market today has penny stock traders looking for short squeezes. Thanks to extensive breakouts from the likes of AMC Entertainment, GameStop, and plenty of others, the market metrics of this trend have led to huge making money potential. One of the reasons for this is the short-term moves made by these types of stocks. But, first, what is a short squeeze, and why should it matter?
In basic terms, investors “short” a stock as a bet against it. They may feel that companies are overvalued and could drop in price. So, to take advantage of this speculative bet, they’ll borrow shares from a broker, sell those shares, then repurchase them at a lower price to return their loan.
The difference in price between the original sale price and the repurchase price is a short trader’s profit. Sounds great, right?
What happens in the event the stock price doesn’t drop? The short trader still needs to return their loan to the broker. The price per share doesn’t matter; only the shares borrowed.
This is where your short squeeze comes into play. Borrowed shares essentially get repurchased at higher prices, and as the share price continues higher, other shorts get “squeezed” out of their positions, taking a loss. Meanwhile, retail buying adds to the equation, and, in this scenario, you’d see market events like AMC exploding hundreds of percentage points in a short period.
Learn more: Penny Stocks Trading for Beginners [2021]
Short Squeeze Penny Stocks To Watch
- PetVivo Holdings (NASDAQ: PETV)
- Petros Pharmaceuticals (NASDAQ: PTPI)
- Opko Health (NASDAQ: OPK)
- Ring Energy (NYSE: REI)
- Beyondspring Inc. (NASDAQ: BYSI)
PetVivo Holdings (NASDAQ: PETV)
PetVivo Holdings is no stranger to big moves in short periods. In fact, at the start of November, PETV stock went on a multi-day, 105% move to highs of over $5. One of the exciting trends to have emerged recently is in the pet industry. One of the contributing factors to a boom in “man’s best friend” came during the pandemic as more people chose to bring pets into their homes during the lockdowns last year. According to data from Statista, the US pet industry alone is expected to reach nearly $110 Billion in 2021.
PetVivo specializes in medical therapeutics for animals. The company will debut new products at the American Association Equine Practitioners (“AAEP”) conference next week. “We are looking forward to networking with leaders in the industry and develop relationships that will help drive forward our initial veterinary medical device, SPRYNG, for the management of lameness issues, including conditions related to osteoarthritis, in our family members and equine athletes” said John Lai, Chief Executive Officer of PetVivo Holdings, Inc.
But the real story among retail traders puts more of a spotlight on share structure and short interest right now. While Fintel data shows PETV stock has a short float percentage of less than 10%, the lower float of the penny stock lends itself to the potential for volatile spikes. We saw this last month, and the latest uptick in trading volumes could put PETV back on the list of penny stocks to watch right now.
Petros Pharmaceuticals (NASDAQ: PTPI)
Earlier this quarter, we discussed Petros Pharmaceuticals on a list of penny stocks to watch. Among the highlights, we discussed the company’s positioning ahead of potential milestones to be on the lookout for. In particular, we discussed Petros’ position in the men’s health industry and its relationship with companies like Hims & Hers.
Petros recently highlighted the progress made with the sales growth of STENDRA tablets. This is a prescription medicine used to treat erectile dysfunction. Thanks to a digital health marketing agreement with Hims & Hers Health Inc. (NASDAQ: HIMS), momentum has built up throughout the last few weeks after the company reported a 476% year-over-year uptick in STENDRA sales. Petros also closed a $10 million financing this week with funds earmarked for expanding STENDRA availability.
Similar to PetVivo, Petros isn’t on the higher end of the short float percentage. However, its lower float and the fact that it does have some sort of short could put it on the list of potential short squeeze penny stocks to watch. According to Fintel data, PTPI stock’s short float percentage sits around 9.7%.
Opko Health (NASDAQ: OPK)
Another potential “short squeeze penny stock” to watch is Opko Health. Thanks to its broad pharmaceutical development platform and operating entities, the company has gained attention. One of the recurring points of focus for obvious reasons is Opko’s COVID-19 diagnostics company, BioReference Laboratories.
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This week, it announced COVID-19 testing preparedness for the Omicron Variant. BioReference’s PCR diagnostic tests for SARS-CoV-2 COVID-19 are based on identifying RNA target genes common to all coronaviruses. Furthermore, Jon R. Cohen, M.D., Executive Chairman of BioReference Laboratories, explained that the new Omicron variant “should have no impact” on the company’s ability to diagnose the presence of COVID-19.
Though new cases are popping up worldwide and attention is on vaccine stocks, the first step in identifying virus threats is detection. In this instance, some of the “pick and shovel” companies deploying diagnostic testing could become a focus. Meanwhile, with Fintel data showing a short float percentage of around 12% right now, OPK could also be on the lower end of the list of penny stocks to watch with noticeable short interest.
Ring Energy (NYSE: REI)
Energy stocks have been in and out of focus this month. Discussions on global supply have become a sticking point for some as energy prices have flip-flopped recently. Ring Energy is a traditional oil and gas exploration. Also, as far as REI stock price is concerned, it has moved in kind with the broader sector.
In its latest quarterly report, Ring beat sales estimates despite missing on earning per share expectations. The company reported a net income of over $14 million, roughly 12 cents per share. Net income was $6.8 million or 7 cents per share for the third quarter on an adjusted basis.
“We continue to benefit from our targeted 2021 drilling programs designed to not only mitigate the decline in our baseline production but also maximize long-term cash flow as we capitalize on the current higher commodity price environment,” said Paul D. McKinney, Chairman of the Board and Chief Executive Officer in a November update.
Over the last few weeks, the drop in oil prices hasn’t helped stocks in the sector. REI shares have slipped from highs of over $4 to lows of under $2.25 in the previous few weeks. This has led to a current short float percentage of over 17% right now.
Beyondspring Inc. (NASDAQ: BYSI)
Finally, Beyondspring Inc. rounds out this list of “short squeeze penny stocks” after plummeting this quarter. If you’re wondering why you’ve never heard about this on the site, it’s simply because the company has traded well above the $5 mark. In fact, before its significant drop, shares of BYSI stock were trading above $13 per share.
The company’s cancer treatment portfolio came into question earlier this month. Beyondspring received a complete response letter from the FDA concerning its plinabulin in combination with granulocyte colony-stimulating factor (G-CSF) to prevent chemotherapy-induced neutropenia. Reacting to this decision, Dr. Lan Huang, BeyondSpring’s co-founder, chief executive officer, and chairwoman, explained, “BeyondSpring strongly believes that plinabulin in combination with G-CSF has significant potential to raise the standard of care in CIN, a devastating side effect of chemotherapy…The Company plans to request a meeting with the FDA and remains committed to its goal of bringing plinabulin to cancer patients in need globally.”
While things attempt to work themselves out in the stock market, today, BYSI stock trades below $5, although on higher than average volumes this week. Furthermore, Fintel data shows that its short float percentage sits slightly above 24% as of this article.
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Penny Stocks To Buy [or avoid]
Keep in mind that whether we’re talking about potential short squeeze stocks or low float penny stocks, the risk is a significant factor. Not only are you looking at companies with bets against them by the market, but volatility risk can also take you by surprise if you’re not used to trading in such environments. With this in mind, make sure to have a plan in advance no matter the penny stocks you’re looking to trade.
