We recently compiled a list of the 8 Stocks with Lowest Short Interest to Buy. In this article, we are going to take a look at where The Procter & Gamble Company (NYSE:PG) stands against the other stocks with lowest short interest to buy.
A report from S3 Partners revealed that the rally in Chinese stocks as a result of stimulus measures cost traders who were betting against the US-listed shares ~$6.9 billion in mark-to-market losses. Benchmark CSI 300 index saw an increase of more than ~22% over the past month. The Nasdaq Golden Dragon index went up by over ~34% during the same period. Much of these increases were seen off the back of policy-easing measures.
S3 Partners went on to say that, before this market rally, short sellers continued to build their positions profitably in the falling market. However, after the rebound, the short selling in the group slowed. Before China announced the stimulus plans, shorting the Chinese stocks was a popular strategy, with several market players going underweight in the sector.
Short Selling in Q2 2024
S3 Partners reported that short interest in the US/Canada markets went up by $57.9 billion, or 5.1%, to $1.20 trillion in Q2 2024. The increase comprised $73.9 billion of new short selling, which was partially offset by a $16.0 billion fall in the mark-to-market value of shares shorted. During the quarter, the sectors that saw the largest increase in short selling were the IT, Industrials, and Communication Services sectors. On the other hand, the Energy sector was the only sector that saw a decrease in shares shorted (short covering).
Short Sellers Reduced Their Positions in This Sector
S&P Global reported that short sellers decided to pull back their bets against consumer staples stocks on the US exchanges during the summer months. This comes amidst the general increase in overall short interest throughout equities. Recent data suggests that the short interest in the consumer staples sector declined to 3.87% at the end of August from 4.16% at the end of May. The decline in short interest against consumer staples stocks might be due to the decline in inflation.
On the other hand, short interest in the industrial sector went up by 21 bps from the end of May to the end of August, rose 20 basis points in the healthcare sector, and jumped 19 basis points in the real estate sector, as per the company. With the expectations of further rate cuts, market experts opine that the consumer staples sector might see sustained demand. The consumer spending resulted in solid Q2 2024 Gross Domestic Product (GDP) growth of 3% (annualized), approximately double the rate of Q1 growth, as per the US Bank.
After the rate cut in September, market strategists recommended going long on consumer discretionary and consumer staples sectors. This is because these sectors are expected to receive a boost as declining mortgage rates might benefit spending, reported Reuters.
Therefore, with the expectations of lower inflation and interest rates, there can be some revival in consumer confidence. This should result in increased spending on staple goods, which might lead to improved performance in the consumer staple sector. As per Evercore, among the S&P 500 sectors, consumer staples and consumer discretionary have seen the best average performance, with both sectors gaining ~14% a year after the rate cut.
Our Methodology
To list 8 Stocks with Lowest Short Interest to Buy, we used a Finviz screener to extract the list of stocks having the lowest short interest. Next, we narrowed down our list to the following 8 stocks having short interest of less than 2%. Finally, the stocks were ranked in the descending of their short interest.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A happy couple viewing the products of this household and personal product company in a mass merchandiser store.
The Procter & Gamble Company (NYSE:PG)
Short % of Float (as of September 30): 0.87%
Number of Hedge Fund Holders: 64
The Procter & Gamble Company (NYSE:PG) is engaged in the provision of branded consumer packaged goods worldwide.
The Procter & Gamble Company (NYSE:PG)’s strong brand portfolio and well-diversified business are expected to drive a long-term growth trajectory. Its extensive product portfolio spans across multiple categories, such as beauty, grooming, health care, fabric & home care, among others. This diversification should continue to offer the company stability and resilience against market fluctuations. Innovation should be the key driver of The Procter & Gamble Company (NYSE:PG)’s growth strategy.
The Procter & Gamble Company (NYSE:PG) continues to invest in research and development to bring new and improved products to market. This strong emphasis on innovation aided the company in maintaining its market share momentum and creating opportunities for premium pricing. Additionally, The Procter & Gamble Company (NYSE:PG)’s global presence enables it to tap additional growth opportunities in emerging markets. This can help in offsetting slowdowns in more mature markets.
Its ability to tailor products and marketing strategies to local preferences should be a significant factor in international success. One of the company’s strengths has been its pricing power, which can be leveraged for future growth. In FY 2024, The Procter & Gamble Company (NYSE:PG) saw net sales of $84.0 billion, reflecting a rise of 2% versus the prior year. Organic sales, which exclude the impacts of foreign exchange and acquisitions and divestitures, rose 4%. Increased pricing contributed 4 points of growth to organic sales.
TD Cowen gave a “Buy” rating on the shares of The Procter & Gamble Company (NYSE:PG) and a $189.00 price target on 23rd July.
Overall PG ranks 4th on our list of the stocks with lowest short interest to buy. While we acknowledge the potential of PG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.