Connect with us

Breaking News

These 2 Hated Stocks Could Be The Market’s Best Recovery Plays – Here’s Why

These 2 Hated Stocks Could Be The Market’s Best Recovery Plays – Here’s Why

Short-sellers beware, these 2 hated stocks could deliver surprise upside.

The coronavirus pandemic threw a wrench in 2020, and short sellers have thrown cold water on any hopes there will be a smooth return to normalcy.

Consumer, travel, and vacation stocks have been hit hard this year and are some of the most popular shorts in the market, with names like American Airlines (NASDAQ: AAL), Royal Caribbean (NYSE: RCL), United Airlines (NASDAQ: UAL), and Whirlpool (NYSE: WHR) becoming some of the most shorted names. 

But short sellers—who make money when shares of a targeted stock drop—could get burned by two of the most hated names.

“Hanesbrands (NYSE: HBI) at some point is going to stage a comeback,” said Gina Sanchez, CEO of Chantico Global. “I mean, this commando situation can’t go on forever.”

Hanesbrands tanked hard earlier this year amid the COVID-19 sell-off, but shares are up nearly 125% since the stock bottomed in early April. Still, short interest is at 10% of the stock’s float.

“They’ve been able to pivot into making face masks and gowns for the federal government, but they’re going to come back, and quite frankly I think they’ll come back just as strong as they were before,” Sanchez said. “and it’s a longer-term play, but I think that play is there and I think that this is probably an unloved name that needs more attention.”

Another hated name with high short interest is on Delano Saporu, founder of New Street Advisors, radar right now.

“If you look at the long-term case for Under Armour (NYSE: UAA), what you really want to see is execution. So, can they improve?” Saporu questioned. “They have a lot of big sponsors and they get those names, but can they improve with the execution of the products and the rollout of those products? Also, they’ve put a lot of money into investment in fitness and wearables, which didn’t really pan out, so I want to see better execution with those acquisitions.”

Unlike Hanesbrands, Under Armour shares fell hard earlier this year and have yet to bounce back. The athletic apparel and footwear maker’s stock is currently down around -55% year-to-date, and short interest on shares are at 10%.

Analyst Same Poser said earlier this month that the worst may be over for Under Armour, boosting his rating on the stock from Negative to Neutral.

Poser wrote in a note that there’s “less potential for extreme downside for the stock” after its second quarter earnings results where the company reported a smaller than expected loss. The analyst added that the better-than-expected report, and an improving digital sales platform could allow for a “potential reset in 2021 and limit near-term downside risk.”

More in Breaking News

Read This Next

To Top