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Good stock-picking isn’t nearly figuring out which corporations are price backing; it’s additionally about figuring out which to keep away from. With the latter in thoughts, I’ve been three UK shares which might be, as I kind, a few 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. Buyers have misplaced their urge for food for the FTSE 250 member in latest instances because the cost-of-living disaster has modified client behaviour and, consequently, impacted earnings. Solely this month, administration warned that full-year revenue would are available 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 instances return.
The inventory adjustments palms 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 enticing and, whereas by no means assured, must be lined 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 need to think about this one.
Sinking share value
Additionally on the record of most shorted UK shares is AIM-listed Ashtead Know-how 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 slightly 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 said that full-year adjusted earnings would now are available “modestly under” its earlier estimate. It seems to be like some merchants imagine the precise outcome might be even worse than feared.
Regardless of the terrible latest kind, this firm has nonetheless greater than doubled in worth since 2021. A P/E of simply eight for FY25 suggests numerous unhealthy information is factored in as nicely.
Half-year numbers are due on 26 August. An surprising bit of excellent information might see the shares bounce. Any worsening might simply go away even new holders beneath water. This can be a bit too dangerous for me, as issues stand.
However the ‘winner’ is…
Occupying prime spot is Sainsbury (LSE: SBRY). Initially, I discovered this quite shocking. In any case, the corporate’s share value, whereas lagging the FTSE 100 index barely, remains to be up 10% 12 months thus far. 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, nonetheless, and I can see why some brief sellers are salivating.
Sainsbury has already signalled that this 12 months’s income will likely be flat at finest resulting from value 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 suitable 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 at present.
