Which of the ASX's most shorted stocks do the brokers think are a Buy?

Short interest can tell you quite a bit about how the wider market is viewing certain stocks. 

The companies seeing shorts shoot up or attracting the ongoing focus of short sellers are often those in troubled waters or facing an uphill battle to win investors back around.

But large short interest doesn't necessarily mean a stock can't offer upside potential. 

Of the top 10 most-shorted stocks on the ASX, six are sufficiently covered by the brokers - Domino's Pizza (ASX: DMP), ZIP Co (ASX: ZIP), Paladin Energy (ASX: PDN), Treasury Wine Estates (ASX: TWE), PLS Group (ASX: PLS) and Flight Centre Travel Group (ASX: FLT).

Of these, the following four are buys, according to Market Index's Broker Consensus tool: 

1 - Paladin Energy (ASX: PDN)

Consensus rating: BUY (8 Buys, 2 Holds, 1 Sell)

Potential upside at consensus target: 33.59%

Following FY26 results, which showed operating cash flow returned to positive for the first full year since its Langer Heinrich project restarted in 2024, uranium producer Paladin rallied above $12.50 but has since pulled back below $10 a share.

But with uranium prices holding around US$90/lb, it could reclaim the post-results share price, given the company is otherwise well positioned. 

As Macquarie wrote in a note when the stock had hit $12.50, "PDN is performing well operationally, and now has strong levels of investor engagement and support."

2 - Zip Co (ASX: ZIP)

Consensus rating: STRONG BUY (3 Buys, 0 Holds, 0 Sells)

Potential upside: 96%

Buy now pay later provider Zip delivered impressive results in the August reporting season, but the market response was short-lived, with the stock giving up its results-day gains immediately. 

But the US growth story remains live. According to Citi, new products could help drive growth in the all-important US market, and its FY27 cash earnings forecast of $346 million could be upgraded if US transaction volume, margins or cost controls improve. 

UBS did cite mixed app data for August, with downloads up 1% YoY but monthly active users down 15% YoY. 

3 - PLS Group (ASX: PLS)

Consensus rating: BUY (7 Buys, 3 Holds, 1 Sell)

Potential upside: 36.99%

Lithium demand drove PLS Group's huge revenue jump in FY26 (up 152% to $1.93 billion), but it remains a favoured pick with brokers regardless of where the lithium price goes next.

According to Citi, PLS's scale, strong balance sheet and growth outlook are reasons to favour the stock, which has cooled off over the last month following reporting season.

4 - Flight Centre Travel Group (ASX: FLT)

Consensus rating: STRONG BUY (3 Buys, 1 Hold, 0 Sells)

Potential upside: 32.71%

Flight Centre has been a popular short-seller target and has endured a tough run as the conflict in the Middle East has upended the travel industry. 

That made FY26 a tale of two sectors. 

Corporate saw 28% profit growth, while Leisure fell 22% amid a complex macro and consumer backdrop. FY27 could be the opposite story, with Corporate weakening and Leisure starting strong, according to Morgans.

If and when operating conditions improve, the broker is confident that earnings, and subsequently the FLT share price, will be materially higher, and is targeting a price of $14.25.