3 Most-Shorted Stocks That Are Buy-Worthy Today

Chris Tyler

April 1, 2022 4 min read

Virgin Galactic (SPCE) is readying passengers for space and shares are prepared to launch higher.
Sunrun (RUN) investors should be seeing green again after a confirmed monthly bottom.
II-VI (IIVI) offers longer-term bullish trends off and on the price chart.

a clock on top of hundred dollar bills to represent short-term stocks

Source: Shutterstock

Today I’m going to explore some of most-shorted stocks that are worth buying into. More recently risk assets of all kinds slammed into fearful corrections on inflation, Russia’s war on Ukraine and lingering Covid-19 worries. All of these turned the tables on a raging bull market in 2022.

Unsurprisingly, many of the market’s most-shorted stocks were easy collateral damage.

But with the clock ticking toward the end of the first quarter, a historically robust market follow-through day signaled on March 16 changed the tone of the game. Today, a rally with the potential to turn into a new and larger bull market is in play.

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Bearing that in mind let’s take a look at three heavily shorted, mid-cap stocks to buy today.

Ticker	Company	Current Price
SPCE	Virgin Galactic	$9.88
RUN	Sunrun	$30.20
IIVI	II-VI	$70.92

Virgin Galactic (SPCE)

Virgin Galactic Holdings (SPCE) monthly double bottom ready for launch!

Source: Charts by TradingView

Virgin Galactic (NYSE:SPCE) is the first of our mid-cap stocks to buy. It’s fair to say the first thing that comes to mind in SPCE is “meme stock.” And that isn’t entirely without cause.

As one of the market’s early, over-hyped special purpose acquisition companies, the space tourism play’s shares went literally into orbit back in February 2020. Then, as the group became completely overheated in 2021, SPCE stock rocketed to triple-digit returns on two separate occasions.

But this past year’s subsequent bear market in higher multiple SPAC plays took SPCE to new lows, giving it a valuation near $2.75 billion. This offers a great-looking opportunity to buy SPCE at the intersection of where growth meets value.

With Virgin Galactic set to take paying customers into the high heavens later this year, SPCE stock is revealing a lifetime double bottom supported by a bullish stochastics setup and short interest of around 25%.

If you find SPCE appealing, a May $12/$14 bull call spread is one way to safely buckle up while leveraging some of SPCE’s notorious price history.

Sunrun (RUN)

Source: Charts by TradingView

If you’re into greening the planet, as well as your portfolio, Sunrun (NASDAQ:RUN) stock is a hot-looking prospect.

RUN is a solar energy play with a primary focus on the residential market in the U.S. As InvestorPlace’s Dave Moadel notes, Sunrun’s financials aren’t exactly picture perfect. And it’s probably that part of the equation that has the attention of this stock’s bear population (about 17%).

But there’s little denying a secular opportunity for the solar market and Sunrun’s chance to improve its business following what CEO Mary Powell essentially described as “a fantastic 2021 despite Covid-19-related headwinds.”

Technically, RUN stock’s longer-term price chart is agreeable. Shares finished March by confirming February’s bullish hammer candlestick.

Further, the oversold pattern found support off the lower monthly Bollinger band, prior highs from 2019 and RUN stock now sports a bullish stochastics crossover.

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Can RUN reach Dave’s forecasted $60 a share in the near future? That would be quite the double for RUN stock’s shareholders. A hotter idea to consider is a two-bagger using a Nov $30/$40 bull call spread, which guards against larger downside exposure.

II-VI (IIVI)

Source: Charts by TradingView

The one thing Wall Street abhors more than geopolitical wars are bidding wars. And this past year, it took a toll on semiconductor and photonic solutions specialist II-VI (NASDAQ:IIVI).

Along with a quick-to-unfold, risk-off trade last February, an ill-timed deal announced that month helped tank shares by nearly 40% in the span of several weeks.

Bearish short interest, which today stands at 19%, no doubt enjoyed the trade. But the deal to purchase competitor Coherent (NASDAQ:COHR) is now expected to close by mid-May. The merger will undoubtedly pave the way for continued growth in augmented and virtual reality, 3D sensing applications, AI, datacenters, industrial and communications markets.

Despite the uncertainty of battling factions in IIVI, the monthly stock chart shows that bulls have their boots to the ground and are winning the war.

Technically, IIVI stock is in a confirmed uptrend after putting together a successful and well-supported pivot low last October.

Coupled with stochastics and Bollinger band indicators acting as secondary support and IIVI’s veteran leadership, a slightly unorthodox IIVI July $75/$85 stock collar looks appealing.

On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.