Jim Cramer doesn't hold anything back when he engages with retail investors on Twitter. He has often been critical of some of the most popular stocks among the retail crowd, but he seemed to side with the "apes" this time around.
Cramer highlighted several short-squeeze candidates Tuesday night on CNBC's "Mad Money."
"Lately we've seen a lot of low quality stocks rally, purely because too many hedge funds shorted them at the same time," Cramer said. "And those shorts end up getting squeezed."
What To Know: Squeezes became a hot topic following unprecedented moves in AMC Entertainment Holdings Inc AMC and GameStop Corp GME last year.
The names on Cramer's list include Bed Bath & Beyond Inc BBBY, Upstart Holdings Inc UPST, Beyond Meat Inc BYND, Wayfair Inc W and, of course, AMC and GameStop.
Cramer warned that Bed Bath & Beyond is one name to avoid. After bouncing off the lows below $5 per share, the stock surged above $13 in just a couple of days. That type of move sets the company up for an offering, Cramer said.
"Of course if they start issuing new shares, that resolves the short squeeze and sends the stock lower," he said.
Upstart is another stock that has surged in recent weeks, but Cramer said he "gasped at how bad" the company's earnings report was this week.
"Just Like Bed Bath, there's no price where I'd be willing to own Upstart," Cramer said.
Beyond Meat is another stock that has run over the last month or so, but the move is simply a result of high short interest in the name, Cramer said.
"Beyond Meat's fundamentals are beyond awful, and the whole run here was about the short squeeze," he said.
Cramer also highlighted Wayfair. The "Mad Money" host isn't a fan of the stock, but the shorts are starting to get a bit crowded in the name, which means the stock can only go so low before it finds a floor, he noted.
"I don't like it even after today's $12 decline, but if you try to bet against it, you'll probably get squeezed," Cramer said.
He also sees some squeeze potential in GameStop and AMC. When it comes to the former, the company has a large cash position and a 23% short position against it, he noted.
Although he acknowledged the stock is overvalued at current levels, the company has the "financial flexibility to reinvent itself," Cramer said.
"When you look at the core business of video game sales, GameStop probably deserves to be shorted ... but the company has that big pile of cash, it gives them what I call optionality," Cramer said.
Cramer painted a different picture around AMC. If there was one stock on the list that really stood out from the rest, it was undoubtedly the Adam Aron-led company.
"You think I'm gonna come out negative, don't you? The movie-theater chain run by Adam Aron. Now wait a second," Cramer said.
"Here's a case where the company reported better-than-expected revenues and a whopping 59 million in attendance versus 22 million last year. Here's one where the fundamentals are getting better ... to me it's clear that AMC is off the critical list."
Cramer highlighted AMC's announcement regarding a special dividend of AMC Preferred Equity. He applauded Aron for coming on CNBC and explaining the dividend is not dilutive.
"All I can say is AMC is truly doing better, which makes it a terrible short — [a] rare case where the 'short busters' have the fundamentals on their side" he emphasized.
Photo: DonkeyHotey from Flickr.
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