These 'YOLO financial' stocks could be the next short squeeze, BTIG says

Published Mon, Feb 8 202111:01 AM ESTUpdated Thu, Feb 11 20219:32 AM EST

The epic short squeezes in Gamestop and other Reddit trades raised flags about other stocks with heavy bets against them. Analysts at BTIG call the Reddit names "YOLO" (you only live once) stocks, as their following has a tendency to double down on the stocks no matter what. Rookie investors could choose a YOLO stock from anywhere, but those with heavy short interest could be a good place to start. "Does 'Hold' take on new meaning for those whose rallying cry is You Only Live Once (YOLO) when extremes in valuation and volatility make finite in February that which seemed infinite in January?," Julian Emanuel, chief equity and derivatives strategist at BTIG. "What next for the Public, whose investing and speculating resilience since zero fee online trading emerged has been extraordinary?" BTIG screened for stocks within the Russell 3000 financials group with the top 10% of short interest as a percentage of float. Short interest measures the amount of shares that are sold short relative to a company's total available float of stock. The listed stocks also reported better-than-expected results for the previous quarter and have 2021 earnings growth estimates that rank in the top half of their group. This means the stocks have room to run, amid the heavy short bets. "Such 'YOLO Financials' could outperform as the Economy heats up, even if the broader stock market begins to cool down," Emanuel wrote. CNBC Pro recreated the list. Take a look at the names here. BTIG's list is full of insurance companies, banks and diversified financials, all with a sizable portion of short interest as a percentage of float. Aon and Goosehead Insurance are the two insurance companies with a significant portion of short interest. Aon has more than 10% short interest as a percentage of float and Goosehead has nearly 6%. Aon is expected to grow earnings by more than 10% and Goosehead is estimated to show an earnings gain of than 37% this year. Bank OZK , MGIC Investment , Radian Group and Texas Capital are the banks on BTIG's list. Bank OZK has 6.6% of short interest as percentage of float and is expected to grow earnings by more than 44% this year. MGIC Investment has more than 9% of short interest as a percentage of float, and is forecast to have A more than 30% rise in earnings in 2021. Radian Group and Texas Capital have 6.7% and nearly 8% of short interest as a percentage of float, respectively. BTIG expects Radian to grow earnings more than 60% and profits at Texas Capital are expected to gain nearly 300% this year. Franklin Resources , Invesco , Eaton Vance , Santander Consumer , Credit Acceptance and Focus Financial are the diversified financials on BTIG's list. Franklin Resources has 8.35% of short interest as a percentage of float, with earnings-growth expectations of 12.5%. Invesco has more than 6.5% of short interest tied up and is expected to see earnings growth of nearly 33% in 2021. Eaton Vance and Santander Consumer have 5.5% and 8.9% of shorter interest as a percentage of float, respectively. BTIG expects Eaton Vance earnings to expand by 14% in 2021 and Santander's to grow by 10.6% over that period. Credit Acceptance has more than 24% of its float tied up in short interest with 2021 earnings-growth expectations of more than 13%. Focus Financial has more than 8% of short interest as a percentage of float. The firm expects Focus Financial's earnings to grow by 15%. — with reporting from CNBC's Michael Bloom.

Invesco signage is displayed on a monitor on the floor of the New York Stock Exchange.

Michael Nagle | Bloomberg | Getty Images

The epic short squeezes in Gamestop and other Reddit trades raised flags about other stocks with heavy bets against them.

Analysts at BTIG call the Reddit names "YOLO" (you only live once) stocks, as their following has a tendency to double down on the stocks no matter what.

Rookie investors could choose a YOLO stock from anywhere, but those with heavy short interest could be a good place to start.