Forget GameStop, These 8 Stocks Are Being Short-Squeezed, Too

The image of small investors banding together to take on the titans of Wall Street for greedily overshorting GameStop (NYSE: GME) stock has been seared into our public consciousness. Soon the saga will be turned into movies, documentaries, and books.

Yet even though the video game retailer -- and to a slightly lesser extent, movie theater operator AMC Entertainment (NYSE: AMC) -- garnered all the headlines in the drama, there are a number of other stocks where short-sellers overextended themselves.

Below are eight other stocks that at the time of this writing still had significant percentages of their float (or the amount of shares available for trading) sold short. Perhaps not as extensive as GameStop at its peak, when 140% of the float was short, they're still significant amounts that could open the stocks up to a short squeeze.

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Shares of candymaker Tootsie Roll Industries (NYSE: TR) were also the beneficiary of a sudden spike in value because of the large number of shares sold short. Typically a dull performer, the confectioner's stock nearly doubled in value in a matter of days, surging from the $30 range where it had been trading -- for months on end -- to almost $60 per share. It has since returned to its usual level.

Besides its chocolate treat, Tootsie Roll is arguably best known as a consistent dividend payer, having raised its payout every year for more than 50 years, while paying one for far longer. But its yield is an uninspiring 1%, mostly because of the conservative nature of the controlling Gordon family. The dramatic run-up in its stock no doubt caused a tizzy in its usually staid boardrooms.

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Upscale outlet shopping mall operator Tanger Factory Outlet Centers (NYSE: SKT) was undoubtedly targeted by short-sellers because of the ongoing retail apocalypse that began long before the coronavirus pandemic.

While Tanger did see its stock rise during the GameStop feeding frenzy, it was already moving higher prior to that based on a surprisingly good earnings report back in November. The real estate investment trust's stock gained only about 50% during the height of the mania before returning to its regular upward trajectory.

Solar specialist SunPower (NASDAQ: SPWR) is another stock that was moving higher long before the masses jumped into highly shorted stocks, with its shares rising from around $10 per share last August to around $25 per share at the end of the year.

They were continuing their ascent when the dam broke open, but only gained 50% or so before returning to their prior level. The drive behind the stock is based on the potential for solar power to account for 20% of electricity generation by 2050 and SunPower's new focus on marketing solar products and services such as its residential installation program, rather than on solar panel manufacturing.

SunPower may just maintain its upward trend long after the short-selling saga is a distant memory.

The owner of LaCroix sparkling water, National Beverage (NASDAQ: FIZZ), is also a heavily shorted stock with nearly two-thirds of its shares outstanding sold short because analysts have become bearish on its prospects despite seemingly robust results. Sales of LaCroix were up 11% in its fiscal second quarter.

It just announced a stock split as it seeks to capitalize on the heightened interest in its shares. In the press release announcing the move, the company noted, "With the recent increased market participation by smaller and/or individual investors, we believe this Board action today will enhance market liquidity and provide opportunistic long-term value growth for a wider range of investors."

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Ligand Pharmaceuticals (NASDAQ: LGND) seems to be an odd stock to heavily short as it has seen strong sales due to its Captisol therapy being used along with remdesivir to treat COVID-19 patients. Analysts were forecasting its stock to double over the next year before the short-sellers kicked in.

Ligand's stock was up 66% in less than two months before it shot another 37% higher during the short-squeeze mess. It's interesting to note the pharmaceutical's stock has continued to rise even after GameStop and other stocks cratered as fourth-quarter sales and earnings beat estimates, and it raised guidance. With over 21 days needed to cover the short position based on trading volume (anything over seven days is considered a lot), this price increase could be a combination of good news tightening the squeeze on short-sellers.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Home goods retailer Bed Bath & Beyond (NASDAQ: BBBY) was one of the early stocks, along with GameStop and AMC, to get caught up in the short-selling exuberance. However, the retailer had also been rising on the hope its turnaround plan would gain traction.

Bed Bath & Beyond shed all of its noncore business, implemented a cost-cutting program, and is streamlining its expansive store footprint in an effort to bring the home goods business back. There's a lot of hype built into the business beyond the momentum gained from the shorts, so investors might want to see first if the turnaround plan works before diving too deeply into its shares.

Live-streaming sports broadcaster fuboTV (NYSE: FUBO) has made a mark by being a sports-first service, but is quickly looking to march down the field of sports betting after making several acquisitions in that space. It plans to roll out a sportsbook soon to complement the streaming broadcasts its viewers currently watch.

Sports betting has the potential to eventually become a better growth industry than casino gambling, at least growing to an estimated $155 billion opportunity by 2024. The possibilities caused fuboTV's stock to spike in December, even higher than it did during this current wave of stock buying. The live-streamer looks like it has plenty of game left in it yet.

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The most-shorted stock other than GameStop and AMC was Virgin Galactic Holdings (NASDAQ: SPCE), but the rocket ship company is heading into orbit regardless of what the hedge funds are doing. The potential for commercial spaceflight is exciting investors who are causing the stock to become weightless, particularly after Virgin announced a new test flight may launch sometime around Feb. 13.

The stock is up fivefold from its 52-week low and has already more than doubled in 2021. Hedge funds often see themselves as some of the smartest money on Wall Street, but with nearly three-quarters of Virgin Galactic's float sold short and all the good news causing shares to ignore gravity, it seems like a dumb move to have shorted this one.

Selling stocks short can be a valid investment strategy, as long as you don't go overboard. The situation with GameStop proved the old investing saw that the markets can remain irrational longer than you can remain solvent.

While some of these stocks may be valid businesses to short, getting greedy can quickly escalate the risk involved. Only because hedge funds had access to billions of dollars in financing did they not go under. You're likely not to have such financial backstops available to you.

Many of these businesses, though, still have good, if not great, growth prospects ahead of them, and betting on their success rather than potential failure may be more rewarding in the long run.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool recommends fuboTV, Inc. and Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.