Cybersecurity stock NET is a short squeeze candidate in 2024
Every day for the next three weeks, we're going to highlight one of Schaeffer's top 12 picks for 2024. First up, we have cybersecurity stock Cloudflare Inc (NYSE:NET). To access the entirety of the 2023 report, click here.
Cybersecurity stock Cloudflare (NET) is up 85% year-to-date and just crossed the $25 billion valuation level that acted as resistance earlier in the summer. Last month, the shares toppled another layer of resistance after surpassing the $74 region, which is also double the shares' 2022 lows. The stock gapped 13.9% higher in early November after the company raised its fiscal-year guidance.
But despite the encouraging backdrop, there remain 14 "hold" or " sell" ratings on NET, while the 12-month consensus price target sits all the way down at $66.32. Multiple price- target hikes and/or upgrades in 2024 could be in store. And with Cloudflare's Starmine Short Squeeze Score coming in at 94 out of 100 and a healthy 7% of the stock's total available float sold short, a breakout could cause shorts to cover a lot more and fuel a short squeeze rally.
In the options pits, four of the top seven open interest (OI) positions are puts, including a large buildup of strikes at 70 and 60 that can be traded against on any pullback. Premium is affordably priced at the moment too, with NET's implied volatility (IV) at it s cheapest level over the past year.