Don't Miss Out on These 5 Compelling Short Opportunities

I have been recommending investors to have about 40% to 60% of their portfolio short with companies that are overvalued and can fall even in the most bullish markets. Since now I’m bearish on the market, I think investors should definitely have a short position. Towards the end of 2015, I wrote two articles (links here and here) that had a list of 10 companies that I though investors should short.

Most of those 10 companies have lost considerable value.
In this article, I will be give compile a list of five more stocks that investors should short. Let’s take a look at each of those companies.

Wayfair (W) and Mobileye (MBLY)

I have grouped Wayfair and Mobileye together as they were a part of my previous list as well. However, both Wayfair and Mobileye are trading well above my price target, which is why I have included these stocks in my list once again.

Although both Wayfair and Mobileye are down considerably since my bearish call, I think both the stocks are still considerably overvalued and have a lot more downside potential. Given the overvaluation, I think investors can still short both the stocks.

My updated price target for Wayfair is $12, and for Mobileye is $5.

SolarCity (SCTY)

SolarCity is another stock that was a part of my previous list. However, unlike Wayfair and Mobileye, SolarCity has lost considerable value and is trading roughly 50% lower than when I first called it a short. Despite the significant downwards movement, I think investors should still short the stock as it has a terrible business model and will continue losing money forever.

Due to SolarCity’s increasing debt and its terrible business model, I think investors can still short the stock to $5.

Cadiz (CDZI)

Cadiz operates as a land and water resource development company in the U.S. It engages in the water resource, and land and agricultural development activities in San Bernardino County properties. I recently recommended shorting Cadiz in an article, and I still expect the stock to continue heading lower.

In fact, due to the company’s high debt, which has to be repaid in the near future, I think the stock can potentially head down to $0, making it a great short.

Tesla (TSLA)

Like all other stocks in the list, I have also recommended shorting Tesla before. However, after the recent rally, I think Tesla is an even more compelling short than it was a few weeks ago. Shares of Tesla have rallied to over $210, but given the company’s negative profit margin and production restraints, I think investors can short the stock.

Tesla has witnessed revenue growth at a CAGR of 50%, however I think the company will struggle to sustain its growth due to the impending launch of the Model 3. Tesla will be unable to meet the increasing demand, but given the cheaper price of the Model 3, it will record less revenue and profits, which in turn will drive the shares lower. Hence, I think Tesla is a great short as of now and my price target for the stock is $90.
Published on Mar 8, 2016
By Ayush Singh

Copyrighted 2020. Content published with author's permission.

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