3 Laggard Stocks to Short In February

Last week saw a bumpy ride in the stock market. After mid-week selloffs led to a drop of 1.8%, the benchmark index ultimately closed 0.23% higher on the week.

Volatility was last week’s main takeaway. Despite earnings growth expectations increasing, the tech sector in particular took a beating mid-week. 

That's a sign of things to come. Earnings season hasn’t been negative thus far — on the contrary, things have gone much better than expected. But with additional visibility, volatility is to be expected, as investors rotate out of stocks whose growth narratives have failed to materialize, into more promising names.

Scenarios like these offer you the opportunity to take the inverse of the usual approach — identify tickers with weak fundamentals, the ones that will end up on the wrong side of that rotation — and short them.

Doing so successfully, however, can be a bit complex. Time is a crucial factor here — so identifying those stocks quickly is essential. On top of that, there’s a ton of data to go through. Thankfully, there’s a simple way to kill two birds with one stone here — all you have to do is turn to our…

Stocks to Short Strategy

Our in-house quant rating system analyzes 4,600 stocks every single day using a framework made up of 115 distinct factors. The result of that analysis is an intuitive, approachable metric — a stock’s Zen Rating.

Only the top 5% of equities on any given day are given a Zen Rating of A, equivalent to a Strong Buy rating. Conversely, the bottom 5% of stocks are given a Zen Rating of F, equivalent to a Strong Sell rating.

A bit of quick math tells you that 5% of 4,600 is 230 — and while it’s a good start, that’s still plenty of stocks to analyze. But you can narrow the search down even further — by turning to one of our exclusive Zen Strategies.

Each of our 11 Zen Strategies is a 7-stock-strong portfolio — and each consists of carefully-selected equities. With recent market dynamics in mind, today, you’ll get to have a sneak peek at one of those portfolios — the Stocks to Short Strategy.

We’re already seeing some of the dynamics we’ve discussed begin to play out — since the start of February, this portfolio has delivered a 4.07% return — far outpacing the S&P 500’s -0.10% loss in the same timeframe.

Without further ado, here are 3 stocks with lacking fundamentals that you should consider shorting in February…

GCT Semiconductor Holding (GCTS)

Our first pick is GCTS, a fabless wireless semiconductor designed with a focus on 4G LTE and 5G modem chipsets. Right now, GCT Semiconductor Holdings shares rank in the bottom 1% of the equities that we track — in fact, they’re the 3rd lowest-rated on the whole. In addition, this is the lowest-ranked stock in the Semiconductor industry.

So, what makes this a short opportunity? GCTS has rallied by 7% over the past week — but the fundamentals are still in shambles. The company is on a losing streak, having posted three consecutive (and significant) earnings misses. GCT Semiconductor Holdings also ranks in the bottom 6% for Growth, with net revenue having declined from $2.6 million in Q3 2024 to just $400,000 in Q3 2025.

Here’s the long and short of it — this is a small-cap business with a $70 million market cap, and without a moat in a segment where scale wins. GCTS also ranks in the bottom 1% for Financials, and for a business that is hoping to reach EBITDA breakeven in Q3 2026, that’s not a good place to be. Any disruption or setback could cause huge pullbacks in what is already a fraught position.

The counterpoint? GCT Semiconductor Holding has been early with regard to some shipments, and it has recently announced several licensing agreements — but that’s still very little in terms of high-impact, near-term proof when compared to competitors. As a mostly speculative bet, it’s particularly vulnerable to wider tech pullbacks — and that recent 7% bump is an attractive entry point.

Atlas Energy Solutions (AESI)

Next up, we have Atlas Energy Solutions — a $1.46 billion market cap fracking sand producer. It’s also in the bottom 1% of the stocks that we track, rated 5th lowest overall, and is the lowest-ranked stock in the Oil & Gas Equipment & Service industry.

AESI has missed earnings estimates for 10 quarters in a row. The average price target from Wall Street analysts implies a -5.7% downside — but some analysts have given out forecasts that go as low as -31.91%. This puts the stock in the bottom 5% for Sentiment. However, the weakest link is Growth — here, it ranks in the bottom 1%, as those 10 quarters of missed estimates also saw shrinking earnings.

Fracking sand businesses depend on cost, logistics, and proximity to drilling operations. Most of AESI’s operations are concentrated in the Permian basin, which is seeing a lot of new sand capacity — and with it, an increase in supply-side pressure.

The company’s balance sheet is also in a tough spot — putting AESI in the bottom 10% of stocks for Financials. The stock has seen a 17.38% bump in the past month — but for a ticker that ranks in the bottom 2% for Value and the bottom 20% for Safety, that’s a drop in the bucket.

So, why now? The next earnings call is due February 23 — and a turnaround seems unlikely at this point in time. What does seem more likely, however, is a scenario in which that 17.38% bump is erased. The stock is also roughly 30% above its 52-week low — so an even bigger drop is not out of the question.

Tronox Holdings (TROX)

Our final entry for today is Tronox Holdings — a $1.18 billion market cap industrial pigment producer. TROX, like our previous two picks, ranks in the bottom 1% of stocks on the whole — and it’s the lowest-rated stock in the Chemical industry, which has an Industry Rating of F.

Tronox Holdings operates in a segment where fixed costs are high, plants are capital-intensive, and downturns in demand quickly compress margins. The last bit has been going on for a while — TROX has missed earnings estimates for 10 quarters in a row. In terms of Sentiment, it ranks in the bottom 1% — the average analyst estimate implies an 18.73% downside, while the lowest price target on the Street implies a 53.08% downside.

Revenues have declined by more than 60% over the past 3 years. And while revenues are expected to grow by 6.43% this year, this puts the stock in the bottom 1% for Growth. TROX also ranks in the bottom 1% for Value, as well as the bottom 15% for Financials.

Here’s why it’s a short selling opportunity — it has rallied by 23.1% in the past week. The bump came down to two things — rumors surrounding a possible expansion into rare earth minerals, as well as a major plant closure and restructuring. The latter could possibly lead to a leaner structure down the line — but in the short-term, earnings pressure is to be expected. At the same time, the former is speculative, and will take multiple quarters to meaningfully play out.

Simply put, there’s very little substance to back up the bump — and long-term industry trends paint a grim picture. The next earnings call is due February 18 — and could very well mark the start of the aforementioned analysts’ predictions beginning to materialize.

Interested In More Great Stock Picks?

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What to Do Next?

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