8 short squeeze stocks set to soar

Highlights

  • The innovations in finance and the development of financially engineered products have contributed to the imagination of market strategists.
  • Short squeeze can influence the price of a stock.
  • Some investors like to experiment with new trading strategies. 

Conventionally, one of the best-known investing strategies is to buy a stock and hold it keeping a long-term view of the stock. This is known as the buy and hold strategy.

The innovations in finance and the development of financially engineered products have contributed to the imagination of market strategists. Some innovative investment strategies were thus developed in recent times.

Some investors replicate these techniques from other investors. One such strategy is a short squeeze, which can influence the price of a stock rather.

Here, we explore some such stocks that have can see a short squeeze event materialize.

  1. Tucows Inc. (TSX: TC)

Tucows is a technology company operating under two reportable segments: network access service and domain services. The company earns revenue in the form of registration fees selling internet domains and mail services. It held a market cap of over C$ 1 billion.

The stock price of Tucows closed at C$ 94.27 apiece on August 17, 2021, and was trading nearly 22 per cent below its 52-week high of C$ 120.21 apiece (January 28, 2021).

Over the past year, the stock price only increased by nearly 11 per cent.

Tucows posted a net revenue of US$ 75 million in the second quarter of the fiscal year 2021, down from US$ 82.1 million in Q2 FY20. The adjusted EBITDA was US$ 11.2 million, and its net income was US$ 1.8 million in the same quarter.

The net revenue from domain and internet businesses increased by five per cent and 4 per cent, respectively, year-over-year, the company said.

Tucows holds a price-to-earnings (P/E) of 117.2 and a return on equity (ROE) of 6.47 per cent on the valuation metrics.

  1. Maxar Technologies Inc. (TSX: MAXR)

Maxar Technologies is a C$ 2.65 billion space technology company providing geospatial and space solutions to industrial clients and the government. The services range from earth imagery, geospatial analytics.

Maxar Technologies is scheduled to pay its next set of quarterly dividends of US$ 0.01 apiece to its investors on September 30, 2021. The dividend yield was 0.13 per cent.

The scrip price jumped by one per cent in the last nine months. However, over the past year, the stock rose by roughly 2 per cent. It was trading nearly 51 per cent below its 52-week high of C$ 74.4 apiece (January 20, 2021) and closed at C$ 36.52 apiece on August 17.

Maxar Technologies Inc. posted a consolidated revenue of US$ 473 million in Q2 FY2021, up from US$ 439 million in Q2 FY20. The adjusted EBITDA was US$ 132 million, and its net income was US$ 45 in the same quarter.

The senior management announced two new customer contracts who would subscribe to its access program for satellite imagery tasking services.

The increase in revenue for the quarter was attributable to the rise in revenue from international defense and customer intelligence programs, the company said. Moreover, revenue from new commercial contracts was also materialized.

The valuation parameters highlight that Maxar Technologies Inc. holds a price-to-earnings (P/E) ratio of 589 and a return on equity (ROE) of 0.55 per cent.

Also Read: A look at a few leading Sectors for long term investments

  1. Blackberry Limited (TSX: BB)

Blackberry Limited was previously only a smartphone manufacturing company but has now ventured into other segments like the automobile industry, industrial products, and healthcare. Blackberry holds a market cap of C$ 6.92 billion and 566.41 million outstanding shares (at the time of writing it).

Blackberry stock price was trading nearly 110 per cent above its 52-week low of C$ 5.82 apiece reached on October 2, 2020, after it closed at C$ 12.23 apiece on August 17.

In the last three months, the stock price climbed up by 16 per cent, but it rocketed nearly 93 per cent over the past year.

As per the latest press release, Blackberry issued a public advisory notice identifying an issue with multiple Real Time Operating Systems (RTOS) including an older version of its operating system.

Blackberry Limited posted total revenue of US$ 174 million in Q1 FY22, down from US$ 206 million in Q1 FY21. The gross margin stood at 65.5 per cent, and its net loss was US$ 62 million in the same quarter.

Blackberry Limited stands with a debt-to-equity (D/E) ratio of 0.57 and a price-to-book (P/B) ratio of 3.79.

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  1. Ceridian HCM Holding Inc. (TSX: CDAY)

Ceridian HCM Holding is a Canada-based human resource and payroll management company. The company is on the verge of implementing a cloud-based platform for its clients. It holds a market cap of C$ 19.68 billion and 149.86 million outstanding shares.

The stock price of Ceridian HCM Holding Inc. was trading roughly 47 per cent above its 52-week low of C$ 90.46 (September 4, 2020). It closed at C$ 133.2 apiece on August 17.

The stock price climbed up nearly 8 per cent in the last six months, whereas it jumped up by 36 per cent over the past year.

Ceridian HCM Holding posted a total revenue of US$ 250.4 million in Q2 FY21, up from US$ 192.6 million in Q2 FY20. Its net loss was US$ 25.8 million in the same quarter.

Its P/B ratio stands at 7.25, and D/E ratio at 0.54.

  1. First Majestic Silver Corp (TSX: FR)

First Majestic Silver Corp produces silver in Mexico and develops other minerals-based assets. The company owns and operates few gold and silver mines. It held a market cap of C$ 3.83 billion.

The stock of First Majestic Silver Corp closed at C$ 15.23 apiece on August 17 and it was trading close to 50 per cent below its 52-week high of C$ 30.75 (February 1, 2021). The stock price was down roughly 22 per cent on a quarter-to-date basis.

First Majestic Silver Corp announced to pay quarterly dividends of US$ 0.006 apiece on September 16, 2021, to its shareholders. The dividend yield was close to 0.2 per cent.

First Majestic Silver Corp posted revenue of US$ 154.1 million in Q2 FY21, up from US$ 34.9 million in Q2 FY20. Its net earnings were US$ 15.6 million in the same quarter.

The average price of silver increased by 58 per cent YoY and the increase in metal prices attributed to the increase in net earnings in Q2 FY21, the company said.

First Majestic Silver Corp holds an EPS of 0.34, P/E ratio of 46.9, and D/E ratio of 0.26.

Also Read: 3 Canadian stocks to buy that grew more than 100 per cent YTD

  1. Westshore Terminals Investments Corporation (TSX: WTE)

Westshore Terminals Investments Corporation deals in coal extracted from mines and runs a coal storage and loading terminal division. The coal is shipped to Korea, China, and Japan. The company holds a market cap of C$ 1.35 billion.

The shareholders were paid quarterly dividends of C$ 0.20 apiece on July 15, 2021. The dividend yield posted was 3.75 per cent on August 17.  

The stock price surged up nearly 21 per cent over the past year. The stock price, however, increased by 40 per cent on a year-to-date basis. The stock closed at C$ 21.33 apiece on August 17.

Westshore Terminals posted a total revenue of C$ 78.45 million in the quarter ending in June of fiscal year 2021, down from C$ 96.82 million a year ago. Its net income was C$ 24.35 million in the same quarter.

The company is set to build infrastructure to build potash that includes storage building, a dumper and conveying systems.

On the valuation front, Westshore Terminals held an EPS of 1.84, return of assets (ROA) of 9.65 per cent.

  1. Great-West Lifeco Inc. (TSX: GWO)

Great-West is one of Canada’s renowned life insurance companies providing individual and group insurance. It operates in the US, Canada, and Europe. The life insurance firm held a market cap of C$ 36.61 billion and 929.64 million outstanding shares.

Stocks of Great-West closed at C$ 39.49 on August 17 and was trading nearly 57 per cent above its 52-week low of C$ 25.17 (September 21, 2020). In the past year, the stock price climbed up by roughly 48 per cent.

Great-West posted net earnings of C$ 784 million in Q2 FY21, down from C$ 863 million in Q2 FY20.

The company is expected to issue the next set of quarterly dividends of C$ 0.43 apiece on September 30, 2021.

The ROE was 15.22 per cent, P/E ratio of 11.4, and an EPS of 3.48.

  1. Seabridge Gold Inc (TSX: SEA)

This metal and mining company explores and develops gold properties in North America and has various mineral resource projects in that region. It held a market cap of C$ 1.7 billion.

The stock price of Seabridge closed at C$ 22.13 on August 17, down by nearly 11 per cent in the last nine months. The stock was trading roughly 24 per cent below its 52-week high of C$ 29 (January 7, 2021).

Seabridge incurred a net loss of C$ 4.29 million in the March quarter of fiscal year 2021.

The P/B ratio of the company stood at 2.52 and ROE was 0.46 per cent.

Bottomline

The risk and return appetite of investors varies. It is thus advisable to look at and consider the risk-taking ability individually rather than replicating short term strategies that promise big money in no time.

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