Wed. 20 Jul 2022, 10:28am ET Benzinga Analyst Color, Penny Stocks, Small Cap, Top Stories, Analyst Ratings, Trading Ideas

One of the most powerful tradable market events is a short squeeze, so traders are always on the lookout for the next short squeeze candidate. S3 Partners analyst Ihor Dusaniwsky has just released a list of potential short squeeze stocks based on S3's proprietary Squeeze Score rating

The Squeeze Score incorporates S3's Crowded Score, a measure of a stock's total short interest, short percent of float, stock loan liquidity and trading liquidity.

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Dusaniwsky says a stock can be "crowded" with short selling and still not be a good short squeeze candidate unless short sellers have endured substantial losses and are being forced to exit the position. S3's Squeeze Score also incorporates a stock's days-to-cover and short seller losses over the past 30 days and seven days.

“Having a high Squeeze Score does not guarantee that a stock will be squeezed — but it does highlight stocks that have a much higher squeeze potential than most other stocks in the market,” Dusaniwsky said.

When a stock’s borrow fees spike, it applies pressure to short sellers to choose between closing out their positions or letting fees eat into any potential gains.

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Short Squeeze Candidates: Here’s a look at the 12 stocks that have the highest Squeeze Score and post potential for a short squeeze, according to S3 Partners. Total short interest is included for each stock:

  • Faraday Future Intelligent Electric Inc (NASDAQ:FFIE), $118.6 million.
  • Canoo Inc (NASDAQ:GOEV), $132.5 million.
  • Gossamer Bio Inc (NASDAQ:GOSS), $133.3 million.
  • Verve Therapeutics Inc (NASDAQ:VERV), $224 million.
  • Lightwave Logic, Inc. (NASDAQ:LWLG), $176.6 million.
  • Beam Therapeutics Inc (NASDAQ:BEAM), $799.3 million.
  • Cowen Inc (NASDAQ:COWN), $185.2 million.
  • Veru Inc (NASDAQ:VERU), $185.2 million.
  • Beyond Meat Inc (NASDAQ:BYND), $843.9 million.
  • Fate Therapeutics Inc (NASDAQ:FATE), $696.1 million.
  • Allogene Therapeutics Inc (NASDAQ:ALLO), $265.6 million.
  • SpringWorks Therapeutics Inc (NASDAQ:SWTX), $353.5 million.

Benzinga’s Take: Short squeezes are extremely unpredictable, and a high Squeeze Score is not a definitive indication that a squeeze is coming. Yet the combination of high short interest and rising short seller losses makes these 12 stocks worthy of being at the top of any short squeeze watch list.