3 High Short Interest Stocks Set to Pop After Tariff Fears Fade

Key Points

• Market pessimism fueled by trade tariffs has created fertile ground for short squeezes in overlooked stocks.
• Celsius, CAVA Group, and Albemarle all show strong growth potential, favorable positioning, or sectoral insulation from tariffs.
• As trade uncertainty wanes and earnings forecasts improve, these stocks may rally quickly, driven in part by forced buying from short sellers.

The stock market’s sentiment gauge is no different from any other pendulum, which occasionally causes swings in either overly bullish or overly bearish sentiment. 

As it turns out, President Trump's rollout of trade tariffs has caused a lot of negative talk about the broader S&P 500 index and its constituents. However, some names could be set to rebound quicker than the bears may think after uncertainties subside.

Once the fog of tariff uncertainty lifts, high short-interest stocks could become prime candidates for a classic “short squeeze.” This phenomenon, also known as bearish capitulation, occurs when bearish investors—those betting against a stock—are forced to buy back shares rapidly as prices rise, further accelerating the rally.

Those tracking where short interest is heaviest—especially in sectors less affected by trade wars—might just uncover the next breakout story hiding in plain sight.

Take Celsius Holdings Inc. NASDAQ: CELH and CAVA Group Inc. NYSE: CAVA, for example—two consumer-focused companies that are relatively insulated from direct tariff impact. Or consider Albemarle Co. NYSE: ALB, a key player in the basic materials sector that could surge once economic momentum and trade clarity return.

Celsius: Price Action Says It All

Over the past month, which was an eventful one for the S&P 500 index as it got to an official bear market briefly, Celsius stock managed to close the month with a 30.5% return to its shareholders. Several key factors are behind this outperformance.

First, most (if not all) of its supply chain and logistics are centered in the North American markets, not in Asia, where these trade tariffs are focused. More than that, when it comes to caffeinated drinks, Celsius has gained enough market share to the point where investors can start to enjoy the effects of economies of scale.

Second, the company reported that up to 10.8% of its float is being held in short positions today, which is near the higher end of the normal range for any stock. Even the worst week in stock market history since the great financial crisis could knock this stock down, which significantly boosted investor sentiment.

So much so that 12.8% of this short interest was reduced over the past month alone—a sign of bearish capitulation as the best hope these sellers had has been thrown out the window. 

The best part is yet to come, though, as Celsius still trades at only 38% of its 52-week high level, offering investors an amazing risk-to-reward setup. This might have made it easier for Wall Street analysts to keep a consensus price target of up to $45.3 per share, calling for a net upside of as much as 22.1% despite seeing the S&P 500 fall in and out of a bear market.

CAVA: Why Markets Won’t Let Go

There’s a reason the market is often willing to pay a premium for certain stocks: it’s usually because those stocks are expected to outperform their peers and the broader market. In the case of CAVA stock, that expectation is being driven by today’s Wall Street analyst forecasts for strong earnings per share (EPS) growth.

By trading at a price-to-earnings (P/E) ratio of up to 191.8x today, CAVA stock commands a steep premium to the rest of the retail sector and its average 21.7x valuation. This premium can be justified by the analyst forecast for up to 18 cents in EPS for the second quarter of 2025.

Compared to today’s six cents in reported EPS, Celsius now promises to deliver a net EPS growth rate of up to 200%. As most investors know (or should know), where EPS goes, so does the stock price, and at only 51% of its 52-week high, it looks like the company’s 11% in short interest might help to generate more upward momentum from this bottom.

Albemarle: Plenty of Reasons To Rally

A similar trend can be seen in EPS forecasts for Albemarle stock, where analysts now expect to see up to $2.97 in EPS for the fourth quarter of 2025, a massive jump from today’s reported net loss of 60 cents per share.

The reason these analysts can stay so optimistic when it comes to future earnings potential in Albemarle is simple.

Once economic growth uncertainty and trade volume doubts subside, this lithium miner will be near the front of the line to see its orders go through the roof, not only from electric vehicle and battery demand but also from energy infrastructure demand as consumption and economic activity start to come back up.

That thesis can be boiled down to a narrow end result: the analyst consensus price target of $96.05, which calls for as much as 77.9% upside from where the stock is today. This poses a great threat to the short sellers who now hold up to 11% of the company’s float in short interest.

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