Here's Where To Look For A Short Squeeze In The Reopening Restaurant Space

Dine-in restaurants reopened at 25% capacity in New York over the weekend, and analysts are expecting a sharp rebound in struggling restaurant stocks this year.

Danielle Shay, director of options at Simpler Trading, said Friday that one restaurant stock to watch in the near-term is short squeeze candidate Jack in the Box Inc. (NYSE: JACK).

Watching Jack In The Box: The WallStreetBets-fueled GameStop Corp. (NYSE: GME) short squeeze has traders looking for short squeeze opportunities elsewhere. Shay told CNBC that Jack in the Box could be the best potential short squeeze play in the restaurant group.

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“I like Jack in the Box here, but for a short-term options trade. Jack in the Box is right up near previous all-time highs. It has high short interest. Normally I don’t like trading tickers near highs, but with something like this that has high short interest it does have the potential for a short squeeze,” Shay said.

Jack in the Box also has a catalyst right around the corner in its upcoming earnings report due out on Wednesday. The stock currently has about 9.2% short interest, according to FactSet.

While casual dining restaurants are starting their long march back to pre-pandemic business levels, Shay said she will be focusing on fast food stocks, such as Jack in the Box and her preferred longer-term play McDonald's Corp (NYSE: MCD).

See also: How to Make Money on a Short Squeeze

Benzinga’s Take: Investors monitoring the restaurant space for potential short squeezes should also keep an eye on Burgerfi International Inc (NASDAQ: BFI) and Dave & Buster's Entertainment Inc (NASDAQ: PLAY). Dave & Busters has a 21.9% short percent of float and Burgerfi has a 35.3% short percent of float, according to Finviz.

Photo courtesy of Jack in the Box.