There’s a variety of trends to follow in the stock market today, and one of the more popular involves short squeeze potential. Whether we’re talking about stocks over $5 or penny stocks, this is something that retail traders have made sure to focus on ever since the big moves that meme stocks like AMC Entertainment (NYSE: AMC) made last year.
These “short squeeze” candidates start with one key metric: short interest. How big is the short float percentage compared to the overall float and is there unusual volume to back up the speculation? Today we look at a few penny stocks with higher short interest to see if they become the next round of short squeeze stocks to watch heading into March.
Short Squeeze Penny Stocks
- China Online Education Group (NYSE: COE)
- MicroVision Inc. (NASDAQ: MVIS)
- Imperial Petroleum Inc. (NASDAQ: IMPP)
Hot Penny Stocks To Buy For Under $5
We’re talking about stocks under $5 when referencing penny stocks on this list. It’s important to keep in mind that just because they’re “cheap” or have a higher short interest, there aren’t any guarantees that big AMC-style breakouts will happen. But the more you know and the more data you have at your fingertips, the better prepared you are to manage risk in the stock market. Today we have three penny stocks gaining steam and also have higher levels of short interest.
China Online Education Group (NYSE: COE)
The so-called “China stocks” were relatively muted since the start of the year. Even with the big 2022 correction, the broader Chinese-based stocks seemed to trade less connected with the latest market trends. In the case of China Online Education, this thinly traded penny stock has recently experienced some above-average activity in light of its latest series of 13G filings to hit the tape. From February 11th through the 14th, these filings were reported in the company’s SEC filings list showing significant stakes by institutional investors.
Take a look at our article, “Penny Stocks & Due Diligence: Understanding Important SEC Filings,” and you’ll see why this might’ve inspired some optimism in the stock.
A 13G pertains to “passive investors” owning less than 20% of a company’s outstanding shares…These are important because we’ll see which large funds or investors are taking a larger position in a company. These typically lift sentiment for a given company.
Despite a quiet newsfeed, the Chinese online education company’s shares have popped at the end of the month. Is it a short squeeze candidate as well? Based on data from Fintel.IO, the current short float percentage sits around 51%.
MicroVision Inc. (NASDAQ: MVIS)
Automotive lidar solutions technology company, Microvision has also seen a turnaround in the stock market this week. Shares have enjoyed a 2-day bounce back above the $3.70 level. Some mixed earnings reported earlier in the week seem to have helped things, overall. MicroVision missed earnings per share estimates by a penny but beat sales expectations for the quarter. With plans for track testing its high-speed Highway Pilot system in the U.S. and Germany next quarter, MVIS stock is on a few watch lists right now.
What’s more, heading into next month, the company may also be one to watch. That’s because MicroVision presents at the March Investor Summit Virtual Event on the 9th. management participates in one-on-one meetings and presents a virtual group webcast at the event.
Is MVIS stock on the list of short interest stocks to watch? In looking at the data, Fintel shows a current short float of just under 22% right now.
Imperial Petroleum Inc. (NASDAQ: IMPP)
Energy stocks have been red hot this week, especially in light of the latest Russia-Ukraine conflict. Cutting off oil supply, implementing sanctions, and impacting global trade, in general, has brought a big move in energy prices.
Imperial Petroleum owns vessels providing petroleum products and crude oil transportation services. Thanks to a new round of funding, the company has plans to use the capital for acquiring additional vessels to build upon its current fleet. Imperial currently owns three M.R. product tankers and one Aframax oil tanker. With earnings season in full swing, it’s not a surprise that investors may also be looking for further updates on growth after its Q3 results, released late last year.
The company saw fleet operational utilization of 84% during the quarter compared to 87% the previous year’s Q3. Revenue of $4.1 million in Q3 2021 was also lower than the previous year’s period due to a weaker spot market and idle tankers. Considering the strength of the energy market since mid-Q4, it will be essential to see how Imperial has handled its operations.
This week IMPP stock surged on the back of global unrest. Furthermore, traders may have also speculated on the stock after looking at the short float percentage figure on TD Ameritrade. That currently sits at 13.67%.
Are Penny Stocks Worth It?
If you’re new to trading, you might be wondering if penny stocks are worth it or not. A lot of that answer has to do with your experience level and understanding of how to trade in the first place. Can you manage risk? Do you know how to identify strong vs. weak trends? Are you able to decipher news headlines and break down important information? Have you found out how to identify important SEC filing types? How will global headlines affect specific sectors & related stocks?
These are just a few of the many questions to have immediate answers for when trading penny stocks. With volatility as a significant factor in trading, seconds matter. If you’re brand new, here are a few articles that will help you get started on the right foot: