On a forward earnings basis, the company is much more in line with peers but still at the top of the group. Given the amount of competition in this space, investors are likely wary of Day Force’s valuation, even though the company’s doing some good things.

Paper manufacturer International Paper (NYSE: IP) has more than 15.5% of publicly available shares sold short. The stock is up nearly 30% in 2024, so it’s beating the broader market this year. International Paper has been involved in takeover rumors all year, most recently regarding the Brazilian paper company Suzano. This seemed to drive up the share price because the expected offer would have been at a premium to International Paper’s stock price when the rumors first hit. But Suzano ended its takeover attempt in June, and the stock price has hung in, possibly due to more favorable market conditions.

Meanwhile, International Paper has been in the process of acquiring DS Smith, a transaction expected to close later this quarter. The deal is expected to result in cost synergies, so perhaps the market likes the idea, but I would have thought the stock would have retreated more after Suzano didn’t buy International Paper.

Shares of the well-known pharmacy chain Walgreens Boots Alliance (NASDAQ: WBA) have tanked slightly more than 60% this year. Brick-and-mortar pharmacies have not fared well due to increasing competition from online players like Amazon and other operational issues like hiring struggles. Walgreens also had to take a $6 billion impairment charge on its controlling stake in VillageMD, which it purchased a few years ago.

Walgreens has seen declining free cash flow, and it also had to cut its dividend in half earlier this year. Recently, the company reported earnings that beat analyst estimates and said it would close 1,200 stores to boost earnings and free cash flow. It could be a turnaround story, but many challenges remain.

Auto technology company Aptiv (NYSE: APTV) rounds out the group, with more than 14% of shares sold short. The stock is down more than 22% this year. Aptiv has struggled because it makes car parts for electric vehicles, which have seen weakening demand and production in 2024. The company has a significant presence in China, which saw its economy hit hard by weak consumer demand and a housing downturn. Aptiv also faces increased competition after Volkswagen and Rivian joined forces to create a new unit that will make software for electric vehicles.

I would first point out that the bears could be wrong about all five of these companies. That’s why two sides make a market. You don’t have to write off any of these stocks, but investing in them will require a good amount of research to ensure you are comfortable with buying.

I think the bears are wrong about Aptiv, which now has several tailwinds. Government stimulus in China should help the country rebound, or at least put it in a better position than it has been in. Aptiv also seems to be on decent financial footing, having grown revenue and profits in the second quarter (from the linked quarter) despite the difficult backdrop.

In Q2, Aptiv also announced a new $5 billion share repurchase program, including a $3 billion accelerated repurchase program, showing that management is confident in the stock. Finally, the company’s price-to-earnings ratio has been cut in half this year to 5.3, and short interest has begun to come down from highs, so it looks like the bears are starting to get flushed out.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Aptiv, Asana, Paycom Software, Paylocity, Volkswagen, and Workday. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.

These Are the 5 Most Shorted Stocks in the S&P 500 Index. The Bears Are Wrong About 1 of Them. was originally published by The Motley Fool