3 Heavily Shorted Stocks You Might Actually Want to Own

The GameStop (NYSE:GME) saga has taken some wild turns this month, and the volatility wouldn’t be possible if it wasn’t for heavy short interest. The video game retailer was a popular short for hedge funds — the number of shares shorted exceeded GameStop’s public float. 

The problem here is that this company’s fundamentals are weak and getting weaker with every passing year. That means GME could be almost as dangerous to own on the way down as it was to short on its way up.

That said, there are dozens of other stocks out there that have more than 25% of their floats sold short, and they’re not all companies whose best days are in a 2012 time capsule. Among the more than three dozen stocks on that list with market caps above $2 billion, I see Stitch Fix (NASDAQ:SFIX), SmileDirectClub (NASDAQ:SDC), and fuboTV‘s (NYSE:FUBO) as three names worth owning.

Stitch Fix

It’s easy to be down on Stitch Fix at a time when the country’s in the midst of a recession that’s bacon-wrapped in a pandemic. Getting a stylist-curated wardrobe update may be the last thing on your mind when you’re working, learning, and (of course) living at home, and rarely out in social settings. However, Stitch Fix is apparently hotter than your suddenly unfashionable skepticism.

Naysayers have had three chances to course-correct here. When Stitch Fix’s sales declined a mere 9% in its fiscal third quarter — which ended in early May and covered the darkest stretch of the pandemic shock — it was time to give it some credit. When revenue rose 3% in the subsequent quarter ending in August, it was clear a turnaround was in play. Three months later, in its report on the first quarter of its fiscal 2021, it was back to double-digit top-line growth, and Stitch Fix is offering up a rosy outlook for the balance of its fiscal year. If this company found a way to grow through the latter half of 2020, that momentum is going to be hard to stop as we head back out into the world more. Short interest is a third of Stitch Fix’s public float.

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