There are plenty of ways to find the best penny stocks to buy. The first step, however, is knowing your idea of “best.” Everyone has a different style of trading and investing they subscribe to.
Some look for entry opportunities to buy penny stocks and hold them long-term. Others want to be in and out within minutes or hours by day trading cheap stocks. Ultimately, the decision is up to you, and it comes down to what’s on your penny stocks watch list that matters.
One of the ways to create a list is to find a theme that fits your trading strategy. This might include things like “high volume penny stocks” or stocks with big news. Today’s article looks at a list of penny stocks with higher short interest. This trend has become popular over the last two years thanks to the historical rise in the price of shares of meme stocks like AMC Entertainment and GameStop.
How To Find Short Squeeze Stocks
One of the ways to find short-squeeze stocks is to identify higher short interest. You see, one of the ways traders make money when stocks go down is by shorting them. This involves borrowing shares from your broker, selling them in the open market, observing a decline in share price, repurchasing shares at the lower price, and then returning your loan. The money is made from the difference in price between the initial selling price and the final repurchase price.
But when the stock prices rise instead of fall, it can trigger a squeeze. Traders who are shorting still need to repay their loans. When prices rise, they buy back for a loss. As more short-cover buying adds to the already bullish retail trading in the market, that can spark a snowball effect. While they are extreme examples, this is where GME and AMC stocks have shown how wild a short squeeze can get.
There aren’t any guarantees that high short-interest stocks will squeeze. But the first place to research is by looking for stocks that meet those criteria. This article continues the list of penny stocks in our article Penny Stocks To Buy This Week? 4 Short Squeeze Stocks To Watch.
High Short-Interest Penny Stocks
Redfin Corp. (RDFN)
As many of you understand, the housing market has cooled off. For those who may not know, Redfin is one of the more popular real estate trading marketplaces buyers and sellers use to connect. It’s no secret that Redfin and many other related companies have faced plenty of headwinds over the past few months. Rising interest rates and a hawkish Fed haven’t helped sentiment either.
Redfin recently indicated that the supply of homes for sale continues to rise. Late last month, the company said this figure jumped 18% during the four weeks ending December 25th. This was the most significant uptick since 2015, according to Redfin. The company also released data this week showing a record share of sellers are now giving concessions to buyers.
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“Buyers are asking sellers for things that were unheard of during the past few years,” said Van Welborn, a Redfin real estate agent in Phoenix. “They’re feeling empowered, partly because their offer is often the only one, and partly because they know sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions.”
What To Watch With RDFN Stock
In the meantime, home sales continue to jump under certain circumstances. For instance, in a late-December report, Redfin cited all-cash purchases. Homes bought without financing mechanisms increased the highest since 2014. Nevertheless, depressed prices have sparked attention on RDFN stock’s short interest. Fintel.IO has this figure sitting around 18.86%
AST SpaceMobile, Inc. (ASTS)
Another one of the penny stocks experiencing renewed bullish interest is AST SpaceMobile. The company is building a space-based cellular broadband network directly accessible by mobile phones. In an operations update last month, AST outlined several initiatives underway.
In particular, its BlueWalker 3, Block 1 BlueBird, and BlueBird programs were highlighted. “The achievements to date for BlueWalker 3 validate the design roadmap for our BlueBirds, including deploying and flying the largest-ever commercial communications array in low Earth orbit, a key fundamental and patented technology to deliver space-based cellular broadband directly to unmodified phones,” said Abel Avellan, Chairman and CEO of AST SpaceMobile.
What To Watch With ASTS Stock
Now the focus is on this quarter. AST also explained that thanks to the successful deployment of BlueWalker 3’s communications array, it will begin testing with mobile network operators in Q1, 2023. With this backdrop, some look for signs of a reversal in ASTS stock. Part of the focus is on the current short interest. Fintel has this figure showing at roughly 22%.
Imara Inc. (IMRA)
Shares of Imara Inc have been on fire since September thanks to news of an initial asset purchase agreement with Cardurion Pharmaceuticals. It agreed to sell its Tovinontrine and other program assets for over $35 million upfront and options for another $60 million in milestones. At the time of that news, IMRA stock traded below $1.50.
Fast-forward to this week, and the penny stock now trades closer to $5. Though not much news has come from the company recently, there are a few things to keep track of. One of the foremost has been completing a previously announced merger with Enliven Therapeutics. The oncology treatment development company and Imara announced intentions to combine at the start of the third quarter. Since then, customary closing steps have been working themselves out.
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According to the companies, “the combined company will focus on advancing Enliven’s pipeline of precision oncology product candidates. Enliven is advancing two parallel lead product candidates: ELVN-001…in the treatment of chronic myeloid leukemia (CML), and ELVN-002…for the treatment of HER2 mutant lung cancer and other HER2-driven tumor types.”
What To Watch With IMRA Stock
Following the merger, the surviving company would be Enliven, and it would trade under the ticker ELVN. With the process continuing, there’ve been some interesting insider trades. In particular, Ra Capital Management has been buying up IMRA stock, while 10% owner Braden Leonard has been selling. The most recent trades saw Leonard sell 1.25 million shares at $4 per share. Ra, however, purchased nearly 630,000 shares at $4.
With the potential merger looming, insider activity isn’t the only thing on the watch list. So is short interest, which Fintel shows IMRA stock’s short float at 16.83%
List Of Penny Stocks To Watch
- Redfin Corp. (NASDAQ: RDFN)
- Imara Inc. (NASDAQ: IMRA)
- AST SpaceMobile, Inc. (NASDAQ: ASTS)
- Cosmos Health Inc. (NASDAQ: COSM)
- 180 Life Sciences (NASDAQ: ATNF)
- Marathon Digital (NASDAQ: MARA)
- Canoo Inc. (NASDAQ: GOEV)
