When it comes to finding penny stocks to buy in the stock market today, you’ve got to have your head on a swivel. That means being able to adjust your strategy on the fly and knowing how to trade during volatile periods. Right now is one of the most volatile for broader markets.
The concerns over runaway inflation, a pending recession, a “no-landing” scenario, and hawkish comments from the Federal Reserve haven’t helped things either. But when it comes to penny stocks, they tend to move independently of major indexes.
That being said, when markets are trading more erratic, that breeds a sense of opportunity to capitalize on short-term trends. Not “marrying” an idea during times like these and trading day-to-day has been something that most traders are looking at. That has resulted in focusing on niche trends like short squeeze stocks or “short interest stocks” to buy.
What’s unique about these is their ability to explode quickly and to great heights. On the other hand, the downside can be just as swift and just as aggressive. So where do you start?
How To Find Short-Interest Penny Stocks
The first question you might ask is how can you find stocks like these? It’s all in the data, which means finding stocks with higher short interest. In most cases, traders are betting against the stocks by taking out short positions.
They want to benefit from the price of stocks dropping. If their short works out, they make money when stocks go down. At the heart, these traders borrow shares from their broker, sell the stock at the market’s price, and then are required to repurchase the stock at the lower level, return their loan, and pocket the difference. No matter what happens, the point is that the traders must return the same number of shares they borrow.
That means if the price increases instead of decreases, those who are short will lose more money as the price climbs. When a short squeeze triggers, it’s usually a period where they’re scrambling to buy back stock as the price climbs higher. This can create a snowball effect and send the stock on a parabolic move. This is what was seen early on Monday morning when shares of Contrafect Corp. (NASDAQ: CFRX) exploded. Shares hit fresh 52-week lows of $3.02 on Friday.
As of Monday morning, CFRX stock skyrocketed to $6.95. Speculation over the weekend on several stocks with higher short interest seems to have been behind this move. In the case of CFRX stock, for example, Fintel.IO shows the short float was sitting around 900%. Whether or not that was an accurate figure came secondary to the wild squeeze the penny stock experienced.
The interesting part about this penny stock is that it didn’t trade high daily volume levels leading up to Monday’s move. That is another point to make as short squeeze stocks can happen unassumingly, unlike other types of trends traders are following this year.
Short Squeeze Stocks To Watch
It’s important to note that just because there’s higher short interest, that doesn’t mean a squeeze is guaranteed. However, the first place to begin making a list is to find stocks that fit those criteria. This article looks at a few more short-interest penny stocks to watch.
Danimer Scientific (DNMR)
Shares of Danimer have been on the recovering path since the stock dropped after earnings. The company develops and produces biodegradable materials and reported a significantly larger loss per share last quarter compared to estimates. It also missed revenue expectations by a wider margin. In response to the results, CEO Stephen E. Croskrey explained, “We remain focused on accelerating our growth trajectory as we prepare for several significant expected customer product launches in the months ahead. Based on expected customer demand momentum, we believe our existing operations can provide us with sufficient cash flow to run the business effectively as volumes grow.”
Danimer has taken a focus on sustainable and natural plastic products. Considering the recent train derailments and the chemicals spilled, plastics producers may be coming into focus. The Ohio derailment, for example, saw vinyl chloride getting splashed into the environment. The plastics industry uses this chemical. It’s also associated with an increased risk of liver cancer and other cancers, according to the federal government’s National Cancer Institute.
As a result, Danimer has come into the spotlight based on speculation that “alternative plastics” will become a point of attention. Whether or not that ends up becoming the case is to be seen. However, DNMR stock has come into focus within this conversation on plastic production. It may also be one of the short-interest stocks to watch. According to Fintel and TDAmeritrade, that figure sits around 19%.
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COMSovereign Holding Corp. (COMS)
Recent reverse split stock COMSovereign Holding has been bleeding out since readjusting its share structure. This month COMS stock hit fresh 52-week lows of $2.83 (split adjusted) just days after inking its latest deal. COMSovereign and the University of North Texas are collaborating on a 5G edge-centric hosted infrastructure test platform.
The two plan to develop the platform for secure, private, low-cost, and delay-sensitive applications featuring a 5G wireless communication testbed. It will support various projects in mobility technologies like UAVs, autonomous vehicles, edge computing, and public safety communication.
This week, news of the company filing its quarterly report ending last September seems to have brought more attention back to the penny stock. Though, like CFRX, COMS stock hasn’t seen much daily trading activity since it announced a debt reduction in its outstanding secured debt earlier this month. As far as short interest is concerned, data from Fintel shows the figure sitting around 850%. Meanwhile, TD Ameritrade has the COMS stock short float showing 11.84%. If you’re looking at the penny stock for short interest, it may be worth noting this wider discrepancy.
MicroVision Inc. (MVIS)
MicroVision has been on a few of the watch lists regarding things like short squeezes. It has exposure to the EV industry, focusing on automotive lidar and driver-assistance systems. A presentation at this year’s Consumer Electronics Show (CES) helped shed some light on the company’s platform. Last year, MicroVision launched its MAVIN platform, achieved Class 1 laser safety compliance, and announced its intent to acquire Ibeo Automotive Systems for up to 15 million euros.
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The acquisition, in particular, would combine MAVIN with Ibeo’s perception software into the MicroVision ASIC for automotive OEMs. Furthermore, the company explained in a related update that it also accelerates the combined company revenue streams from hardware and software products, with a forecast ranging between $8 to $15 million in 2023.
Last week, MAVIN was in the news thanks to a video showing its integration into perception software. The dynamic view lidar sensor, MAVIN™ DR, demonstrated seamless integration between the hardware and the software as a key driver behind MicroVision’s acquisition of assets from Ibeo Automotive Systems GmbH. Something else to consider is that the company releases its next round of earnings on Tuesday. While that adds another layer of risk, it is a source of speculation at the end of February.
Furthermore, the MVIS stock short interest is a focus for some. According to Fintel.IO and TDAmeritrade, the MVIS short float percentage is around 23%.
List Of Penny Stocks
- Danimer Scientific (NYSE: DNMR)
- COMSovereign Holding Corp. (NASDAQ: COMS)
- MicroVision, Inc. (NASDAQ: MVIS)