Top Performing High Short Interest Stocks

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The great thing about the market is that you can make money whether stocks are bullish or bearish. Some stocks have surged, and it may be too late for a long position. The good news is that some stocks have already topped, and shorting them may be profitable. Instead of looking only for stocks that have upside potential, you can diversify your portfolio by entering short positions. Several big stocks have dropped by 50% and may offer more downside. High short-interest stocks help traders gauge short stocks.

Quick Look at the Top Performing Short-Interest Stocks:

Deep Dive

Several stocks have proven to be volatile and in a downtrend for some time. A trend reversal is also possible. Whether you’re positioning to ride the downtrend or go long, a few high-short-interest stocks are worth exploring.

Heron Therapeutics Inc. specializes in developing treatments for acute care and oncology care, focusing on improving clinical outcomes for patients. The company offers innovative solutions, including advanced therapies designed to address unmet medical needs related to postoperative pain and chemotherapy-induced nausea and vomiting. Heron Therapeutics stands out for its robust product pipeline and successful integration of novel delivery systems, enhancing the efficacy of already-approved pharmacological agents, making it a compelling option for investors seeking growth in the biopharmaceutical sector.

Blink Charging Co. (NASDAQ: BLNK) is a prominent player in the electric vehicle (EV) charging industry, providing a comprehensive range of EV charging equipment and networked services. The company is unique for its extensive network of charging stations, which supports the growing demand for EV infrastructure as the world shifts towards sustainable transportation. Blink Charging distinguishes itself through innovative solutions and strategic partnerships that enhance the accessibility and efficiency of EV charging. This forward-looking approach positions Blink as a key contributor to the EV ecosystem, making it an attractive option for investors interested in the green energy sector

Beyond Meat Inc. (NASDAQ: BYND) is a leading innovator in the food industry, specializing in plant-based meat substitutes that replicate the taste and texture of animal-based products. The company’s mission is to offer consumers nutritious alternatives to meat that are environmentally sustainable and free from genetically modified organisms (GMOs), soy, and gluten, while also being low in cholesterol. Beyond Meat stands out due to its focus on sustainability, leveraging cutting-edge technology to create products that have a significantly lower environmental impact compared to traditional meat production. This commitment to health and sustainability, combined with a growing consumer trend towards plant-based diets, makes Beyond Meat a compelling choice for investors looking to support innovative and socially responsible companies.

Beam Global (NASDAQ: BEEM) is a company dedicated to leading the world toward clean mobility through the production of innovative, Made-in-America products. Based in San Diego and Chicago, Beam specializes in sustainable energy solutions, including solar-powered electric vehicle (EV) charging stations that do not require any grid connection, making them highly versatile and eco-friendly. What sets Beam apart is its focus on sustainability and independence from traditional power infrastructures, which aligns with the growing global emphasis on reducing carbon footprints and promoting renewable energy sources. This unique approach to clean energy and mobility presents Beam as an attractive option for investors interested in forward-thinking, environmentally responsible companies.

Arch Resources Inc. (NYSE: ARCH) is a leading producer and distributor of thermal and metallurgical coal, operating through segments such as the Powder River Basin and Metallurgical. The company's focus on high-quality coal for steel production and energy generation distinguishes it in the market. Arch Resources is recognized for its commitment to safety, environmental stewardship, and sustainable mining practices, aiming to deliver reliable energy solutions while minimizing environmental impact. This commitment to sustainability and innovation makes Arch Resources an attractive option for investors looking for a company that balances operational efficiency with environmental responsibility.

Pros

You don’t have to wait only for buy signals, as shorting a stock is also an opportunity to profit. High short-interest stocks provide several benefits to bullish and bearish traders.

Indicates market sentiment: Traders use market sentiment to gauge the potential stock direction. A significant increase or decrease in a stock’s short interest serves as an indicator of market sentiment to investors. 

A rise in a stock’s short interest from 20% to 30% usually means that the market has become more bearish on the stock. In cases like that, 50% more investors believe that the stock’s value will weaken.

Let's imagine that you bet against the market: When market sentiment is bearish, some traders believe that’s a buy signal. Their sentiment is that extreme short interest is a contrarian indicator. Stocks with extremely short interests are prone to short squeezes — triggering rapidly rising prices because lots of short-sellers are holding positions.

When a short squeeze occurs, many short traders buy back the stock to cover their positions and avoid losses. That action can surge the price even higher.

In and out quickly: You can convert short interest into a days-to-cover ratio — the number of short shares divided by the average daily trading volume. That calculation gives you the average number of days for the shorts to cover their position.

The higher the days-to-cover, the greater the bearish sentiment is. Low days-to-cover means that bearish traders have a short period to cover their positions. Short interest guides traders about how long to hold their positions and enables them to spot trades that they can get in and out of quickly.

Drawbacks of a High Short-Interest Investment

Getting into high short-interest investments doesn’t guarantee profits because market sentiment is bearish and a stock’s short interest is high. These stocks can rise in value. 

No opportunities to go long: Traders who successfully use short interests to take bearish profitable trades tend to stick with short positions. They’re enticed by the profits earned from shorting stocks and tend to seek mostly short trades.

That potentially results in losing profits from long trades they could have entered. Traders should seek buying and selling opportunities.    

Stocks are volatile: Stocks that have been in a downtrend for some time could reverse quickly. They’re prone to short squeezes and could shoot up. Some traders use the short interest that exchanges publish monthly, so the information is slightly outdated. The real-time short interest could differ vastly from the reports. 

How to Choose

It’s not uncommon for stocks with high short interest to be in a short squeeze — triggering rapidly rising prices because lots of short-sellers are holding positions. Traders use short interest to gauge market sentiment. And some traders see high short interest as a potential buy signal.

Traders in short positions could be forced to liquidate and cover their positions by buying the stock. If many short sellers buy back the stock, the price could surge. The difficulty lies in forecasting such a position. When the short interest of certain stocks reaches extreme highs, some traders believe that is a strong buy signal.

Stocks That are Shorted the Most

Whether a stock has high volatility or has been in a downtrend for some time, certain stocks tend to be shorted the most. 

Some of the most shorted stocks:

A comprehensive list of most shorted stocks is available on Benzinga.