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Good stock-picking isn’t nearly figuring out which corporations are value backing; it’s additionally about figuring out which to keep away from. With the latter in thoughts, I’ve been taking a look at three UK shares which are, as I kind, a number of 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 increased 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 great occasions return.
The inventory adjustments arms on a price-to-earnings (P/E) ratio of 11 as effectively — arguably low-cost given the excessive working margins posted yr after yr. The 5.6% dividend yield is equally enticing and, whereas by no means assured, needs to 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 take into account this one.
Sinking share worth
Additionally on the record 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 supplies subsea know-how options to the worldwide offshore power sector — has fallen by a bit over 40% in 2025 alone.
Ashtead has confronted numerous points, together with geopolitical pressures and “vital disruption within the US market“. In July, it said that full-year adjusted earnings would now are available in “modestly under” its earlier estimate. It seems like some merchants consider the precise outcome might 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 effectively.
Half-year numbers are due on 26 August. An surprising bit of fine information might see the shares soar. Any worsening might simply go away even new holders beneath 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 moderately shocking. In spite of everything, the corporate’s share worth, whereas lagging the FTSE 100 index barely, continues to be up 10% yr up to now. That’s pretty spectacular contemplating that the patron economic 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 brief sellers are salivating.
Sainsbury has already signalled that this yr’s income will probably be flat at finest on account of worth wars. Margins might 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 precise 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 right this moment.
