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Good stock-picking isn’t nearly understanding which firms are value backing; it’s additionally about understanding which to keep away from. With the latter in thoughts, I’ve been taking a look at three UK shares which are, as I sort, among the hottest amongst short-sellers — merchants betting their costs will go down.
Gross sales crumble
To some extent, the hate for Domino’s Pizza (LSE: DOM) is comprehensible. Traders have misplaced their urge for food for the FTSE 250 member in current occasions because the cost-of-living disaster has modified shopper behaviour and, consequently, impacted earnings. Solely this month, administration warned that full-year revenue would are available in decrease than beforehand anticipated, not helped by larger staffing prices.
If there’s a silver lining to this cloud, it’s that rivals like Pizza Hut are additionally feeling the ache and shutting websites for good. This might work in Domino’s favour if/when the nice occasions return.
The inventory adjustments arms on a price-to-earnings (P/E) ratio of 11 as nicely — arguably low cost given the excessive working margins posted 12 months after 12 months. The 5.6% dividend yield is equally engaging and, whereas by no means assured, must be coated by anticipated revenue.
The scorching UK climate is unlikely to have been good for gross sales. However the inevitable arrival of colder days would possibly imply courageous contrarians will wish to contemplate this one.
Sinking share worth
Additionally on the checklist of most shorted UK shares is AIM-listed Ashtead Expertise Holdings (LSE: AT.). Once more, this isn’t all that shocking. The worth of the corporate — which offers subsea expertise options to the worldwide offshore power sector — has fallen by a little bit over 40% in 2025 alone.
Ashtead has confronted quite a lot of points, together with geopolitical pressures and “important disruption within the US market“. In July, it acknowledged that full-year adjusted earnings would now are available in “modestly under” its earlier estimate. It appears like some merchants imagine the precise consequence may very well be even worse than feared.
Regardless of the terrible current kind, this firm has nonetheless greater than doubled in worth since 2021. A P/E of simply eight for FY25 suggests quite a lot of unhealthy information is factored in as nicely.
Half-year numbers are due on 26 August. An sudden bit of fine information may see the shares leap. Any worsening may simply depart even new holders below water. It is a bit too dangerous for me, as issues stand.
However the ‘winner’ is…
Occupying high spot is Sainsbury (LSE: SBRY). Initially, I discovered this slightly shocking. In spite of everything, the corporate’s share worth, whereas lagging the FTSE 100 index barely, continues to be up 10% 12 months so far. That’s pretty spectacular contemplating that the patron financial system is hardly firing on all cylinders. The yield of 6.1% is tempting too.
Dig a bit deeper, nevertheless, and I can see why some quick sellers are salivating.
Sainsbury has already signalled that this 12 months’s income might be flat at finest because of worth wars. Margins may very well be trimmed additional if prices retains rising. Elsewhere, gross sales at Argos have been falling.
Most worrying for me although has been the numerous promoting by quite a few administrators, together with CEO Simon Roberts. Executives clearly have the best to guard their wealth. However the truth that this occurred en masse in April and Could makes this Idiot reluctant to ponder taking a place as we speak.
