Among the many elements of investing, stocks with significant short-term interest often steal investors’ attention because they offer the potential for a sudden and explosive jump.
Investors have adopted the usual strategy of closely monitoring stocks with a significant percentage of short-term rates, anticipating the possibility of a ‘short dip’.
This phenomenon occurs when heavily discounted stocks witness a frantic rush by traders to cover their positions, resulting in a dramatic increase in demand and prices.
Today, October 2nd, we explore the intriguing prospects of two such stocks with the potential for a remarkable turnaround.
Marathon Digital (NASDAQ: MARA)
Founded in 2010, Marathon Digital (NASDAQ: MARA) is one of the world’s largest crypto mining companies. Led by American CEO Fred Thiel, the company went public in 2012, reaching an all-time high of more than $154 just two years later amid one of the first bitcoin (BTC) markets.
Today, the stock is trading 95% off its peak and is one of the most undervalued stocks in the US. More than 31% of MARA’s float has been shorted by investors, according to MarketWatch data, even though the stock is up over 150% this year.
However, despite such high short interest, most analysts are optimistic about Marathon Digital’s stock market outlook. Namely, the five analysts who offered their 12-month forecasts for MARA set an average target price of $15.4, which is over 81% higher than the current price.
MARA stock target price according to analysts. Source: TradingView
At the same time, the blockchain stock has an average analyst rating of ‘Buy’ on TradingView, based on the seven market experts who have rated the stock in the past three months. Three of them see MARA as a ‘strong buy’, while 4 advise ‘hold’.
If these predictions come true and MARA rises to the levels predicted by analysts, it would raise the prospect of a potential short-term decline in prices and thus significant returns for investors.
Enovix Corporation (NASDAQ: ENVX)
Another company that has attracted significant short interest among investors is silicon battery maker Enovix Corporation (NASDAQ: ENVX ). Headquartered in California, the company designs, develops and manufactures sophisticated silicon-anode lithium-ion (Li-ion) batteries through its three-dimensional (3D) cell architecture.
According to MarketWatch, 30.95% of Enovix’s float is currently short. Shares have made a negligible return in 2023, rising by around 3.5% since the beginning of the year.
Even so, analysts are anything but bearish on ENVX. Specifically, the stock’s average 12-month target price currently stands at $31.42, implying a potential upside of more than 150% from its current market price of $12.55.
ENVX stock price target according to analysts. Source: TradingView
Additionally, the analyst consensus rating is ‘Strong Buy’, according to TradingView, based on 11 ‘Strong Buy’ recommendations over the past three months and only 1 ‘Hold’.
With Enovix trading miles away from its all-time high and short interest elevated, a possible recovery in the battery maker’s stock could result in a significant price drop and thus a huge price rally.
While the prospect of a short squeeze can be tempting, it’s important to remember that it depends on a multitude of factors and may not always materialize as expected. Traders should be cautious and do thorough research before jumping into stocks with high short-term interest, as market dynamics can change quickly and risks abound in this volatile terrain.
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Waiver: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
