4 Undervalued Stocks in Rally Mode, Boosted by Short Covering

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 |  Includes: ALGN, HFC, IMAX, TRLG
by: Kapitall

When evaluating stocks on a rally, it’s always interesting to see what short sellers think of the momentum.

With that in mind, we looked at undervalued stocks (with PEG <1) on a rally, trading above their 20-day, 50-day, and 200-day moving averages.

Among these stocks, we screened for those that have seen significant drops in shares shorted month-over-month – a signal that short sellers think there's more upside than downside in a stock. The final list of 4 is below.



Are these stocks poised to continue upwards? Use this list as a starting-off point for your own analysis into undervalued opportunities.

List sorted by decrease in shares shorted as a percent of share float.

1. True Religion Apparel Inc. (NASDAQ:TRLG):
Apparel Clothing Industry. Market cap of $671.51M. PEG at 0.76. The stock is currently 6.92% above its 20-day moving average, 13.52% above its 50-day MA, and 21.50% above its 200-day MA. Shares shorted have decreased from 5.48M to 5.01M month-over-month, which is a decrease of 2.04% of a 23.02M share float. The stock is a short squeeze candidate, with a short float at 21.12% (equivalent to 12.35 days of average volume). The stock has had a good month, gaining 17.11%.



2. IMAX Corporation (NYSE:IMAX): Photographic Equipment & Supplies Industry. Market cap of $2.02B. PEG at 0.81. The stock is currently 1.31% above its 20-day moving average, 9.10% above its 50-day MA, and 40.90% above its 200-day MA. Shares shorted have decreased from 4.37M to 3.61M month-over-month, which is a decrease of 1.39% of a 54.67M share float. The stock has had a good month as well, gaining 18%.



3. Holly Corporation (HOC): Oil & Gas Refining & Marketing Industry. Market cap of $3.37B. PEG at 0.85. The stock is currently 4.47% above its 20-day moving average, 9.68% above its 50-day MA, and 61.50% above its 200-day MA. Shares shorted have decreased from 2.97M to 2.30M month-over-month, which is a decrease of 1.29% of a 51.85M share float. The stock has had a good month, gaining 11.71%.

4. Align Technology Inc. (NASDAQ:ALGN): Medical Appliances & Equipment Industry. Market cap of $1.64B. PEG at 0.92. The stock is currently 18.75% above its 20-day moving average, 19.90% above its 50-day MA, and 31.41% above its 200-day MA. Shares shorted have decreased from 8.53M to 7.78M month-over-month, which is a decrease of 1.28% of a 58.63M share float. Short float at 11.45% (equivalent to 10.84 days of average volume), indicating the stock is a short squeeze candidate. The stock has gained 21.4% over the last year.

*Shares shorted sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.