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2 Short Squeeze Stocks That Could Take Flight This Month

2021 has been the year of short squeezes, exemplified by huge retail bets against hedge funds' short positions. After gaining handsomely from GameStop (GME) and AMC Entertainment (AMC), retail investors...

This story originally appeared on StockNews

2021 has been the year of short squeezes, exemplified by huge retail bets against hedge funds' short positions. After gaining handsomely from GameStop (GME) and AMC Entertainment (AMC), retail investors have focused on several other short squeeze candidates seeking to benefit similarly from those names. Gogo (GOGO) and Big 5 Sporting Goods (BGFV) are two such stocks. They possess a high short interest, and we think could witness a short squeeze rally this month. Read on. - StockNews

As the hype surrounding the popular short-squeeze candidates GameStop Corporation (GME) and AMC Entertainment Holdings, Inc. (AMC) began to fade, some new names started dominating discussions on several social media platforms. Short squeeze stocks are characterized by high short interest over a short period. Retail investors bet against institutions, typically hedge funds, with short positions in particular stocks to force a short squeeze.

Recently, some new names have begun making a buzz and could witness a short squeeze this month. Furthermore, according to some analysts and investors, the Federal Reserve’s signal that it will eventually raise interest rates is unlikely to stop the rise of meme stocks or short squeezes.

Gogo Inc. (GOGO) and Big 5 Sporting Goods Corporation (BGFV) currently have more than 30% short floats. And given these companies’ strong fundamentals, we think these stocks could take flight this month.

Gogo Inc. (GOGO)

GOGO, which is based in Chicago, is an inflight internet company that provides broadband connectivity services for the business aviation market. The company operates through three segments—Commercial Aviation North America (CA-NA); Commercial Aviation Rest of World (CA-ROW); and Business Aviation (BA). GOGO also designs, builds, and operates air-to-ground (ATG) networks and delivers customizable connectivity and wireless entertainment services.

Last month, GOGO announced that it would launch Gogo5G next year, which will deliver 25 Mbps on average with peak speeds in the 75-80 Mbps range. The company believes that Gogo 5G will be a fast and easy upgrade for aircraft installed with AVANCE L5 and deliver a quality connectivity experience in business aviation.

GOGO’s total revenue increased 31% year-over-year to $87.17 million in the third quarter, ended September 30, 2021. The company’s operating income grew 39.1% from the year-ago value to $30.91 million. Its net income came in at $10.96 million, compared to a $80.12 million net loss in the prior-year quarter. Also, the company’s EPS amounted to $0.16, versus  a $0.97 loss per share in the third quarter of 2020.

Analysts expect GOGO’s revenue for its fiscal year 2021 to be $332.47 million, representing 23.3% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. GOGO’s EPS is expected to increase 87.2% in the current year and 238.5% next year.

The stock has gained 37.2% in price over the past six months and 75.4% over the past year. GOGO has a 32.4% short float.

GOGO’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

The stock has a B grade for Growth and Momentum. We have also graded GOGO for Value, Sentiment, and Stability. Click here to access all of GOGO's ratings. GOGO is ranked #60 of 70 stocks in the Air/Defense Services industry.

Big 5 Sporting Goods Corporation (BGFV)

BGFV is a sporting goods and accessories retailer headquartered in El Segundo, Calif. The company offers athletic shoes, apparel, accessories, camping, tennis, golf, winter and summer recreation, and home recreation products. BGFV markets its products under Coleman, Rawlings, Spalding, Asics, Columbia, Franklin, Lifetime, Razor, Speedo, Bearpaw, and various other brands.

During its fiscal third quarter, ended October 3, 2021, BGFV’s net sales were  $289.64 million. The company’s gross profit amounted to $107.98 million. Also, its operating income came in at $32.83 million, and its EPS amounted to $1.07 during the period.

BGFV’s revenue is expected to increase 11.2% year-over-year to $1.16 billion in its fiscal year 2021. BGFV’s EPS is estimated to grow 74% in the current year.

The stock has surged 130.8% in price over the past nine months and 283.9% over the past year. Also, BGFV has a 43.09% short float.

BGFV’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Momentum and Quality, and a B grade for Value.

In addition to the POWR Rating grades I have just highlighted, one can see BGFV’s ratings for Growth, Stability, and Sentiment here. BGFV is ranked #7 of 38 stocks in the A-rated Athletics & Recreation industry.

GOGO shares were trading at $15.59 per share on Tuesday morning, up $0.28 (+1.83%). Year-to-date, GOGO has gained 61.89%, versus a 26.79% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.


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