20 Stocks at Deep Discounts From Target Price Seeing Bullish Short Trends

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 |  Includes: ACI, AEL, BZ, CMEDQ, CSIQ, CYH, ENTR, GFA, GM, HOLI, HRB, ISLE, JASO, JRCCQ, LDK, NANO, PWER, SCCO, SCHL, SPRD
by: Kapitall

For a look into the sentiment surrounding a stock, changes in number of shares shorted can be a very helpful indicator. Here we present a list of 20 stocks that are trading at steep discounts to mean analyst target price (used as a proxy for fair value). These stocks have also seen significant decreases in the number of share shorted month-over-month, indicating a bullish change in sentiment from short sellers.

Although target price is known to suffer from an upward bias, whenever there are steep discounts from a company’s target price, it can indicate undervaluation.

Do you think these stocks will soon recover these discounts from target? Use this list as a starting-off point for your own analysis. List sorted by decrease in shares shorted as a percent of share float.

1. Boise Inc. (NYSE:BZ): Paper & Paper Products Industry. Market cap of $657.36M. Target price at $11.10 vs. current price at $7.87 (implies a discount of 29.10%). Shares shorted have decreased from 17.70M to 7.72M month-over-month, a decrease representing 14.48% of the company's 68.93M share float. It's been a rough couple of days for the stock, losing 8.25% over the last week.



2. JA Solar Holdings Co., Ltd. (NASDAQ:JASO): Semiconductor Industry. Market cap of $981.54M. Target price at $8.66 vs. current price at $5.85 (implies a discount of 32.45%). Shares shorted have decreased from 28.91M to 24.24M month-over-month, a decrease representing 5.34% of the company's 87.41M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.97).



3. James River Coal Co. (JRCC): Industrial Metals & Minerals Industry. Market cap of $742.72M. Target price at $28.92 vs. current price at $20.95 (implies a discount of 27.56%). Shares shorted have decreased from 8.95M to 7.88M month-over-month, a decrease representing 3.62% of the company's 29.55M share float. The stock might be undervalued at current levels, with a PEG ratio at 0.74, and P/FCF ratio at 10.09. The stock has gained 20.73% over the last year.


4. Canadian Solar Inc. (NASDAQ:CSIQ): Semiconductor Industry. Market cap of $398.53M. Target price at $12.75 vs. current price at $9.31 (implies a discount of 26.98%). Shares shorted have decreased from 5.12M to 4.12M month-over-month, a decrease representing 3.35% of the company's 29.81M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 3.28).

5. Power-One Inc. (NASDAQ:PWER): Diversified Electronics Industry. Market cap of $910.91M. Target price at $11.50 vs. current price at $8.85 (implies a discount of 23.04%). Shares shorted have decreased from 35.01M to 33.48M month-over-month, a decrease representing 1.66% of the company's 92.07M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.16). The stock is a short squeeze candidate, with a short float at 31.91% (equivalent to 7.29 days of average volume). The stock has had a good month, gaining 17.99%.

6. LDK Solar Co., Ltd. (NYSE:LDK): Semiconductor Industry. Market cap of $1.29B. Target price at $14.42 vs. current price at $8.75 (implies a discount of 39.32%). Shares shorted have decreased from 23.59M to 22.82M month-over-month, a decrease representing 1.33% of the company's 57.74M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.7). It's been a rough couple of days for the stock, losing 17.61% over the last week.

7. Spreadtrum Communications Inc. (NASDAQ:SPRD): Semiconductor Industry. Market cap of $931.13M. Target price at $26.03 vs. current price at $19.42 (implies a discount of 25.39%). Shares shorted have decreased from 3.55M to 3.10M month-over-month, a decrease representing 1.31% of the company's 34.45M share float. The stock has gained 103.91% over the last year.

8. Community Health Systems, Inc. (NYSE:CYH): Hospitals Industry. Market cap of $2.67B. Target price at $39.63 vs. current price at $28.30 (implies a discount of 28.59%). Shares shorted have decreased from 13.17M to 12.14M month-over-month, a decrease representing 1.16% of the company's 88.65M share float. The stock might be undervalued at current levels, with a PEG ratio at 0.72, and P/FCF ratio at 6.99.

9. China Medical Technologies Inc. (CMED): Medical Instruments & Supplies Industry. Market cap of $369.17M. Target price at $14.79 vs. current price at $11.51 (implies a discount of 22.18%). Shares shorted have decreased from 5.92M to 5.73M month-over-month, a decrease representing 1.06% of the company's 17.87M share float. The stock has lost 7.14% over the last year.

10. Scholastic Corporation (NASDAQ:SCHL): Publishing Industry. Market cap of $761.90M. Target price at $37.00 vs. current price at $25.94 (implies a discount of 29.89%). Shares shorted have decreased from 2.99M to 2.80M month-over-month, a decrease representing 0.88% of the company's 21.54M share float. The stock is a short squeeze candidate, with a short float at 17.31% (equivalent to 18.19 days of average volume). The stock has lost 1.03% over the last year.

11. Southern Copper Corp. (NYSE:SCCO): Copper Industry. Market cap of $28.61B. Target price at $46.18 vs. current price at $34.91 (implies a discount of 24.40%). Shares shorted have decreased from 4.51M to 3.05M month-over-month, a decrease representing 0.86% of the company's 169.69M share float. It's been a rough couple of days for the stock, losing 6.58% over the last week.

12. H&R Block, Inc. (NYSE:HRB): Personal Services Industry. Market cap of $4.90B. Target price at $19.81 vs. current price at $16.23 (implies a discount of 18.07%). Shares shorted have decreased from 28.82M to 26.37M month-over-month, a decrease representing 0.85% of the company's 287.95M share float. The stock has gained 0.12% over the last year.

13. Nanometrics Incorporated (NASDAQ:NANO): Scientific & Technical Instruments Industry. Market cap of $347.09M. Target price at $21.00 vs. current price at $15.53 (implies a discount of 26.05%). Shares shorted have decreased from 1.32M to 1.18M month-over-month, a decrease representing 0.82% of the company's 16.97M share float. The stock has gained 32.9% over the last year.

14. Isle of Capri Casinos Inc. (NASDAQ:ISLE): Resorts & Casinos Industry. Market cap of $340.92M. Target price at $11.72 vs. current price at $8.74 (implies a discount of 25.43%). Shares shorted have decreased from 1.34M to 1.21M month-over-month, a decrease representing 0.72% of the company's 17.96M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.19). The stock is a short squeeze candidate, with a short float at 5.69% (equivalent to 9.53 days of average volume). The stock has lost 15.13% over the last year.

15. Gafisa S.A. (NYSE:GFA): Residential Construction Industry. Market cap of $2.33B. Target price at $13.69 vs. current price at $10.83 (implies a discount of 20.89%). Shares shorted have decreased from 10.00M to 8.47M month-over-month, a decrease representing 0.71% of the company's 214.21M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.48). The stock has performed poorly over the last month, losing 13.46%.

16. Entropic Communications, Inc. (NASDAQ:ENTR): Semiconductor Industry. Market cap of $708.57M. Target price at $12.96 vs. current price at $8.57 (implies a discount of 33.87%). Shares shorted have decreased from 29.94M to 29.37M month-over-month, a decrease representing 0.67% of the company's 84.46M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.45). The stock is a short squeeze candidate, with a short float at 34.6% (equivalent to 8.59 days of average volume). It's been a rough couple of days for the stock, losing 11.74% over the last week.

17. American Equity Investment Life Holding Co. (NYSE:AEL): Life Insurance Industry. Market cap of $762.79M. Target price at $17.00 vs. current price at $12.85 (implies a discount of 24.41%). Shares shorted have decreased from 6.88M to 6.54M month-over-month, a decrease representing 0.62% of the company's 54.49M share float. The stock is a short squeeze candidate, with a short float at 11.57% (equivalent to 11.32 days of average volume). The stock has gained 36.97% over the last year.

18. Arch Coal Inc. (NYSE:ACI): Industrial Metals & Minerals Industry. Market cap of $4.78B. Target price at $41.39 vs. current price at $29.39 (implies a discount of 28.99%). Shares shorted have decreased from 9.09M to 8.10M month-over-month, a decrease representing 0.61% of the company's 163.06M share float. It's been a rough couple of days for the stock, losing 7.68% over the last week.

19. Hollysys Automation Technologies, Ltd (NASDAQ:HOLI): Industrial Electrical Equipment Industry. Market cap of $543.41M. Target price at $15.31 vs. current price at $10.04 (implies a discount of 34.42%). Shares shorted have decreased from 3.61M to 3.47M month-over-month, a decrease representing 0.61% of the company's 22.88M share float. The stock is a short squeeze candidate, with a short float at 12.14% (equivalent to 8.66 days of average volume).

20. General Motors Company (NYSE:GM): Auto Manufacturer Industry. Market cap of $48.54B. Target price at $42.97 vs. current price at $31.28 (implies a discount of 27.21%). Shares shorted have decreased from 38.45M to 32.79M month-over-month, a decrease representing 0.55% of the company's 1.02B share float.

Shares shorted data 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.