Bears have taken the reins, sending short interest soaring on VTNR
Every day for the next week, we're going to highlight one of Schaeffer's top seven picks for 2022. Yesterday we covered Whirlpool (WHR) and today we look at a stock integral to the energy industry. To access the entirety of the 2022 report, click here.
Oil and gas name Vertex Energy Inc (NASDAQ:VTNR) is up roughly 523% year-to-date, despite a big selloff from its June highs. Most of that surge came in the summer, after the company agreed to acquire Mobile refinery from Royal Dutch Shell (RDS).
Vertex is transitioning into waste oil refining, which has much higher margins than traditional refining operations. After it’s all said and done, the company has projected 2022 revenues of $2.4-$2.5 billion, a value that's nearly nine times VTNR's current market cap. What killed some of the stock's momentum was a delay in the deal closure, after an initial date was announced. With the acquisition now expected to close in the first quarter of the new year, tailwinds could kickstart the stock.
Since there were no bullish catalysts in the fall, bears have taken the reins, with short interest soaring since then. Short interest accounts for 20.4% of VTNR's available float, making the stock a prime short squeeze candidate to start 2022. The $4 level appears to be a stable floor for the shares, too. This means when the acquisition is completed, the bullish catalyst could be that VTNR has become a heavily-shorted stock with technical support in place.
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