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Top Stock Picks for 2021: Square (SQ)
By: Schaeffer's Investment Research | January 21, 2021

• The red-hot payments stock is ripe for a shift in analyst attention

• SQ is a popular contrarian pick given the bearish sentiment around the stock

Online payment provider Square Inc. (NYSE:SQ) has been a stock to watch over the past five years. The equity has dominated the charts since its 2015 initial public offering (IPO), and is now up nearly 1,700%. This surge has only gotten more impressive in 2020, with shares up roughly 250%. There is still plenty of pent-up pessimism surrounding SQ, however, indicating the equity still has room to run -- the perfect pick for options bulls.

Short interest is still inching higher, and now makes up almost 8% of SQ’s available float, or nearly three days’ worth of pent-up buying power. Should some of this positive price action begin to spook bulls, an unwinding of shorts could put additional wind at the equity’s back.

An unraveling of bearish sentiment among the brokerage bunch could give SQ a boost, too. The stock sports a surprising number of "hold" or worse ratings, while 19 of the 34 analysts in coverage call Square stock a "buy" or better. Adding to this, the 12-month consensus price target of $197.01 is a 10% discount to current levels, which might inspire some of these analysts to lift their estimates soon.



Tony Venosa, CMT, is a Senior Options Strategist at Schaeffer's Investment Research. He's has over 20 years of trading experience under his belt -- including a stint in the mid-'90s clerking in the S&P 500 trading pits in Chicago, plus time spent as a commodity broker and proprietary day trader. A graduate of Miami University with a B.S. in finance and decision sciences, Venosa earned his Chartered Market Technician designation in 2008, and has been part of Schaeffer's in-house research team since 2010.

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