When investing in heavily shorted stocks, it is important to know that floating shares are the number of shares available for trading on a particular stock. When a stock has a low float it tends to be more volatile than a stock with a high float, as there are fewer shares to trade.
If a short interest percentage climbs to 40% or over, this could lead to a short squeeze sending the stock price higher. Another factor to consider is days to cover, which — for bullish traders — fewer days to cover is better. For those that are bearish, more days to cover are ideal.
Lastly, the short-interest ratio is the amount of short interest in a stock relative to the average daily volume. The higher the short-interest ratio the likelihood of a short squeeze is more probable, as it will be more difficult for short sellers to buy back shares.
- Big 5 Sporting Goods Corporation BGFV is offering a dividend yield of 8.01% or $1.00 per share annually, utilizing quarterly payments, with an infrequent track record of increasing its dividends. Big 5 Sporting Goods is a specialty retailer company that is principally engaged in the sale of sporting goods in the western U.S. Big 5 Sporting Goods has 22.2 million shares outstanding with 21.1 million shares in float. Out of the floating shares, 29.8% or 6.3 million shares are shorted.
- Big Lots Inc. BIG is offering a dividend yield of 7.35% or $1.20 per share annually, through quarterly payments, with an inconsistent track record of increasing its dividends. Big Lots is principally engaged in operating discount retail stores, and sources the merchandise from traditional and close-out channels.
- Big Lots currently has 28.9 million shares outstanding with 15.8 million floating. From the floating shares, 56.5% or 8.9 million of the float was sold short.
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