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Adami: AutoNation Sets Up for Short Squeeze

Monday, 4 Jun 2012 | 7:08 PM ET

If you’re nimble, Guy Adami thinks AutoNation belongs on your radar. He sees a catalyst that could send shares screeching higher.

“It was a monster stock a few years back but now it’s fallen on hard times,” he explains.

However, now the stock may be oversold with shorts leaning into AutoNation a little too much. “There’s a 20% short interest in this name,” Adami says.

And a catalyst may have just surfaced that bodes well for bulls.

“New vehicle sales were up 45% year over year,” he says. That one data point may trigger a short covering rally.

"AutoNation is so sold I can see a short squeeze driving this stock to $38 - $39,” says Adami with investors who sold the stock short, scrambling to get out.

Trade of the Day: AutoNation
The Fast Money traders discuss how an increase in new vehicle sales year-over-year could positively impact AutoNation.

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Trader disclosure: On June 4, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman is long AAPL; Karen Finerman is long JPM; Karen Finerman is long BAC; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long GRPN PUTS AND PUT SPREADS; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Tim Seymour is long BAC; Tim Seymour is long INTC; Dan Nathan is long AAPL JUNE 550/520 Put Spread; Dan Nathan is long BAC JULY 6/5 PUT SPREAD; Dan Nathan is long MS JAN 10/5 1X2 PUT SPREAD; Dan Nathan is long RIMM JAN 20/25 CALL SPREAD; Dan Nathan is long CHK JAN 12.50/7.50 PUT SPREAD; Dan Nathan is long CHK JAN 10/5 1X2 PUT SPREAD; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU

For Ron Insana
Nothing to Disclose

For Scott Nations
Scott Nations is long C
Scott Nations is long JPM
Scott Nations is long BAC
Scott Nations is long SPY

For Amelia Bourdeau
Nothing to Disclose

For Whitney Tilson
Whitney Tilson is long BRKA
Whitney Tilson is long JCP
Whitney Tilson is long DELL
Whitney Tilson is long JPM
Whitney Tilson is long NFLX
Whitney Tilson is long BKS
Whitney Tilson is long C
Whitney Tilson is long GS
Whitney Tilson is long SNDK
Whitney Tilson is long AIG
Whitney Tilson is long IRDM
Whitney Tilson is long PBY

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  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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