Low float stocks can be some of the most volatile stocks in the market. If you mix in a short squeeze, the potential short-term gains in a low float stock can be extreme.

A stock’s float is the number of shares that trade freely on the public market. Because insiders and institutional investors don’t typically trade their shares on a daily basis, those shares don’t typically contribute to a stock’s near-term liquidity. Float is the number of shares that remain after accounting for insider and institutional ownership.

Why Is It Important? When a stock gains positive momentum in the market, momentum buyers can rush in all at once. If a stock has high short interest, short covering can quickly ramp up demand for shares, triggering a short squeeze. Since low float stocks have relatively few shares trading freely, a major imbalance in supply and demand can serve as rocket fuel for share price.

Buying a low float stock with high short interest isn’t a guarantee of a short squeeze. There still typically needs to be some form of catalyst to get the stock moving in the first place. However, traders can keep an eye on these stocks for any signs of life to try to catch most of a potential big move.

Short Squeeze Candidates: Here are three tech sector stocks that have all the ingredients for a major short squeeze.

Bridgeline Digital Inc BLIN

Bridgeline Digital is a digital engagement company, and the stock has already demonstrated just how much of a short squeeze it is capable of. In late June and early July, a short squeeze sent the stock soaring from under $2.50 to as high as $14.38 in a matter of days. Since then, the stock has come back down to around $6, but it still has explosive potential.

Bridgeline has a float of just 5.76 million shares and a short percent of float of 33%, according to Finviz.

PubMatic Inc PUBM

PubMatic is another under-the-radar tech-sector stock that has demonstrated extreme volatility in 2021. The cloud infrastructure tech stock ripped higher from $25 in January to as high as $76.96 by the end of February before settling back down to around $32.60 today.

With a float of just 7.55 million shares and a short percent of float of 35.2%, PubMatic still has plenty of short squeeze rocket fuel left in the tank.

Beam Global BEEM

Beam specializes in solar-powered products, including electric vehicle charging infrastructure. In the months leading up to the U.S. election in November and the months that followed the Joe Biden victory, Beam shares skyrocketed from as low as $10.53 in September to as high as $75.90 in December. The stock has since returned to the $30.65 level, but short-sellers have piled in betting on more downside.

Beam now has a 7.46 million-share float and 40.5% short percent of float, highest among the three stocks mentioned.