Heavily shorted companies such as CrowdStrike and beaten-down Advanced Micro Devices could pop if the market manages a rebound, according to Evercore ISI. Fears that President Donald Trump ‘s trade policies could spike inflation and slow growth, leading to stagflation, have spurred the recent market sell-off as investors attempt to de-risk and find safer growth opportunities. “The uncertainty has ripped through the ‘soft’ data, begun to infect the ‘hard’ data and has resulted in a virtual ‘straight line plunge’ in the S & P 500, largest correction in two years,” Evercore ISI senior managing director Julian Emanuel said in a note to clients. To find some potential breakout names, Emanuel searched for stocks that have high short interest and low valuations after the recent sell-off. These names could also see a “short squeeze” if the market bounces. A short squeeze occurs when investors who bet against a stock see its price rise and then try to cap their losses by purchasing shares. In turn, this drives the stock price even higher. Emanuel found what he calls the market’s “dislocated diamonds in the rough,” or stocks whose short interest is in the 90th percentile or higher over the past two years and whose price-to-earnings ratio over the next 12 months is at a discount of 30% or greater to its five-year average. Take a look at the names below: CrowdStrike is trading at a 72% discount to its five-year average and its short interest over the past two years is in the 91st percentile, according to Emanuel’s screen. The cybersecurity play has had a rocky start to 2025, with shares roughly flat during that time frame. Last week, CrowdStrike issued weak earnings guidance that overshadowed its fiscal fourth-quarter results. The company is still grappling with issues tied to its global IT outage that disrupted businesses around the world in July . AMD has also plunged on the back of lackluster earnings results and a drop in enthusiasm for AI- and tech-related stocks this year. The chipmaker’s shares have dropped 17% year to date, and the stock is trading at a more than 40% discount from its five-year average. Beer maker Constellation Brands ‘ short interest is in the 100th percentile, per the screen. The stock, which is trading at a 32% discount to its five-year average, is down 17% this year. Sentiment is weak on the company’s outlook as it continues to deal with its struggling wine and spirits division and fears of tariffs affecting its Mexican beer business .
