8 U.S. Consumer Stocks With Significant Short Covering Activity

8 U.S. Consumer Stocks With Significant Short Covering Activity

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Many investors like to find stocks that are preparing to rebound in a short time frame. Luckily, you can take hints from the collective trading activities of sophisticated investor groups, like short sellers. We created a list of companies that meet these criteria.

Short sellers benefit when share price falls. So when they start "covering" (buying back stocks to minimize losses) their short positions, it signals they think the stock has more upside to price in in the near future.

Short sellers are usually sophisticated investors because they have to go through background and credit checks to be able to short a stock. Shorting requires using margin, which is a form of credit, so there is an added level of risk involved in shorting.

Additionally, short covering acts as buying volume on a stock, so if enough short sellers are covering, then it could produce a buying volume that sends shares even higher, prompting more short sellers to cover their position, producing an even higher trading volume and share price. This is referred to as a short squeeze.

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If a short seller is covering, or buying back, their short position, then it’s safe to say that they think that the stock has reached what they think is its lower limit.

Below is a list of stocks that we made using the ideas above. As a recap, we started with consumer good stocks that have market caps over $300 million. Then we checked the most recent month-over-month short transaction data for short sellers that are covering their positions.

Short sellers are becoming more optimistic (or rather, less pessimistic) about these stocks. Do you think these names will be trading higher? Use this list as a starting point for your own analysis.

List Average 1-Year Return: 23%. Diversification score: 50%. 

 

1. Carter's, Inc. (CRI, Earnings, Analysts, Financials): Designs, sources, and markets branded children's wear. Market cap at $3.18B, most recent closing price at $53.84. Shares shorted have decreased from 3.30M to 2.73M over the last month, a decrease which represents about 1.43% of the company's float of 39.83M shares. Days to cover ratio at 4.74 days.

 

2. Calavo Growers Inc. (CVGW, Earnings, Analysts, Financials): Procures and markets avocados and other perishable commodities, and prepares and distributes processed avocado products in the United States and internationally. Market cap at $369.75M, most recent closing price at $25.0. Shares shorted have decreased from 1.62M to 1.41M over the last month, a decrease which represents about 1.76% of the company's float of 11.90M shares. Days to cover ratio at 17.86 days.

 

3. Diamond Foods, Inc. (DMND, Earnings, Analysts, Financials): Engages in processing, marketing, and distributing snack products, as well as culinary, in-shell, and ingredient nuts. Market cap at $415.17M, most recent closing price at $18.82. Shares shorted have decreased from 8.58M to 8.36M over the last month, a decrease which represents about 1.1% of the company's float of 19.99M shares. Days to cover ratio at 24.9 days.

 

4. G-III Apparel Group, Ltd. (GIII, Earnings, Analysts, Financials): Designs, manufactures, imports, and markets a range of outerwear and sportswear apparel to retailers primarily in the United States. Market cap at $719.08M, most recent closing price at $35.90. Shares shorted have decreased from 2.02M to 1.80M over the last month, a decrease which represents about 1.66% of the company's float of 13.24M shares. Days to cover ratio at 13.63 days.

 

5. JAKKS Pacific, Inc. (JAKK, Earnings, Analysts, Financials): Designs, produces, markets, and distributes toys and consumer products worldwide. Market cap at $320.83M, most recent closing price at $14.57. Shares shorted have decreased from 3.75M to 3.30M over the last month, a decrease which represents about 1.75% of the company's float of 25.65M shares. Days to cover ratio at 16.47 days.

 

6. Peet's Coffee & Tea, Inc. (PEET, Earnings, Analysts, Financials): Operates as a specialty coffee roaster and marketer of fresh roasted whole bean coffee and tea in the United States. Market cap at $965.89M, most recent closing price at $73.34. Shares shorted have decreased from 3.08M to 2.91M over the last month, a decrease which represents about 1.3% of the company's float of 13.05M shares. Days to cover ratio at 11.83 days.

 

7. Steelcase Inc. (SCS, Earnings, Analysts, Financials): Designs, manufactures, and distributes furniture systems and seating products, user-centered technologies, and interior architectural products primarily in North America, Europe, and Asia. Market cap at $1.23B, most recent closing price at $9.85. Shares shorted have decreased from 3.26M to 2.40M over the last month, a decrease which represents about 1.03% of the company's float of 83.23M shares. Days to cover ratio at 3.93 days.

 

8. Skechers USA Inc. (SKX, Earnings, Analysts, Financials): Engages in the design, development, marketing, and distribution of footwear for men, women, and children in the United States and internationally. Market cap at $1.02B, most recent closing price at $20.40. Shares shorted have decreased from 4.39M to 3.70M over the last month, a decrease which represents about 1.74% of the company's float of 39.57M shares. Days to cover ratio at 5.29 days.

 

 

 

 

 

 

 

 

Short data sourced from Yahoo! Finance, all other data sourced from Finviz.

 

 

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