3 High Short-Interest Stocks With A Squeeze In The Making
MarketBeat.com | Oct 19, 2021 05:49AM ET
Beyond Meat (NASDAQ:BYND), Ollie's Bargain Outlet (NASDAQ:OLLI), and Haverty Furniture Companies (NYSE:HVT) have very little in common other than a high and growing short interest. These companies are all fundamentally strong and supported by secular tailwinds but overshadowed by issues plaguing the market. Supply chain issues, labor market issues, freight issues, and rising inflation are playing havoc with the outlook, and the bears are taking full advantage. While there's no guarantee which stock will become the next great meme stock all three of these have a high potential to positively surprise the market and spark a short squeeze in their share prices. Until then, they're all high-quality stocks trading at low levels and attractive in our eyes.
h2 Beyond Meat Is Going Mainstream/h2Beyond Meat has been struggling with competition while it works to ramp capacity, expand its reach, and improve profitability. The biggest risk has been pricing with ts competitors lowering prices putting pressure on the company to do the same, but that may soon become moot. With inflationary pressures rising throughout the economy, Beyond Meat and its competitors are going to have to respond. Meanwhile, Beyond Meat is working hard on deals with Taco Bell, PepsiCo (NASDAQ:PEP), and McDonald's (NYSE:MCD) to bring its plant-based meat products to the mass market. PepsiCo hopes to Bring Beyond meat to the multi-billion-dollar meat snack industry while McDonald's and Taco Bell obviously want to go the route of fast food. The latest news in that regard is a test of the Beyond Meat’s McPlant burger at some McDonald's US locations.
The Marketbeat.com data shows Beyond Meat is a heavily shorted stock with 23% of shares outstanding and 26% of the float currently sold short The company is slated to report earnings the first week of November and, in our opinion, will very likely smash the consensus estimate. The current consensus is expecting a double-digit sequential decrease in revenue that we just don't see coming. Shares of Beyond Meat are currently moving upward from the long-term support level of $100.
Haverty Furniture Company has seen a sustained increase in business due to the pandemic. Not only has growth returned to pre-pandemic levels but it has far exceeded them and growth is expected to accelerate again this quarter. The analysts are expecting revenue to grow about 4% sequentially but the Bears aren't so sure. The short interest of 17% is telling us the Bears expect to see supply chain and freight disruptions impact the company's business. The risk for the Bears is that, trading at 7X earnings and yielding 3%, Haverty can miss the consensus estimate and still put in a really solid quarter. Price action May slip in the wake of the report but we would expect to see it quickly bottom as bargain-hunting high yield investors scoop them up. Shares of Haverty are down 38% from their recently set high and trading above what we view as a strong support level.
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Ollie's Bargain Outlet missed its consensus estimates with the last earnings report and that got the Bears excited. With blood in the air and the stock trading above 25X earnings, it was ripe for a correction. Now, with the stock down more than 30% from recent highs it is ripe for a reversal provided a catalyst emerges. Ollie’s is slated to report earnings the first week of December and could very well surprise the market at that time. The consensus is for revenue to hold steady from the previous quarter and we see upside risk in the numbers. Not only was the back-to-school season strong but the recent retail sales figures were strong as well. Shares of Ollie's are running with a 20% short interest and currently bouncing from an historically strong support level.
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