Stock markets don’t have any short cuts to success.
Investors need to hold high-quality stocks with patience for multibagger returns. The idea is to create a core portfolio that remains untouched for an extended period. Of course, business developments need to be monitored on an ongoing basis.
At the same time, many prefer smaller portfolios of trading stocks. These are typically ideas that can burst higher in the next few quarters and deliver robust returns.
Let’s explore three speculative stocks to buy for a short-squeeze rally of at least 50% in the next few quarters. Notably, these rallies are generally sharp, and 50% returns can be a matter of weeks. However, taking a conservative approach, these stocks can deliver the desired returns within six months.
Another point to note is that these speculative stocks represent companies with average fundamentals. Fundamentally weak names have been avoided.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) stock has witnessed a sharp correction of almost 60% in the last six months. The downside is overdone, and BLNK stock is undervalued. However, the short interest in the stock remains high at 32.6%. If business developments remain positive, a 50% rally in a matter of weeks would be plausible.
From a fundamental perspective, there are two reasons to be positive. First, Blink Charging is on a high-growth trajectory. For Q3 2023, the company reported revenue growth of 152% on a year over year (YOY) to $43.4 million. Stellar growth will likely sustain on the back of the impending penetration in electric vehicle (EV) charging stations in the U.S.
Further, Blink Charging is moving toward profitability. The company has guided for positive adjusted EBITDA by December 2024. Margin expansion will probably sustain in the next few years on operating leverage and growth in service revenue.
In January, Needham opined that BLNK stock can potentially double. I am agreeable with this view primarily on the back of operating efficiency and margin expansion.
Marathon Digital (MARA)
Marathon Digital (NASDAQ:MARA) has been volatile with an upward bias as Bitcoin (BTC-USD) trends higher. The short interest in the stock remains high at 21%. Thus, a big short-squeeze rally is impending.
Two fundamental reasons back this view. First, Bitcoin is likely to surge higher with the halving event impending in April. Also, the Bitcoin spot ETF and potential expansionary monetary policies will support the rally.
Further, Marathon Digital has undertaken an aggressive hash rate capacity expansion. As of January, the company reported operational hash rate of 19.3EH/s, which was higher by 239% YOY. At the same time, the company’s installed hash rate has increased to 26.7EH/s and the target is to boost capacity to 50EH/s by the end of 2025.
With massive expansion plans, MARA is positioned for stellar revenue and cash flow upside. If Bitcoin trades at new all-time highs in the coming quarters, Marathon Digital can deliver multibagger returns. Therefore, a short-squeeze rally of 50% might be a base-case scenario.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) stock has plunged by 60% in the last six months. Without doubt, the hydrogen company has concerns related to growth plans, financing, and execution. However, PLUG stock appears deeply oversold. With short interest still at 33.78% of free-float, a big short-squeeze rally seems likely.
In terms of growth plans, Plug Power expects revenue of $1.2 billion for 2023. Further, the company has guided for revenue of $6 billion and $20 billion by 2027 and 2030 respectively. With big targets, the company has ambitious growth plans.
However, concerns exist. First, it remains to be seen if the execution remains on track. Further, I believe that financing growth is likely to be a concern after a big stock correction. The equity dilution must be massive to raise significant funds for expansion. Amidst these challenges, I am betting on a sharp reversal rally from oversold levels that’s likely to be magnified by a potential short-squeeze.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.