The AGL Energy Limited (ASX: AGL) share price may be trading lower on Wednesday but that hasn't taken the shine off its impressive recent run.
Since this time last month, the energy company's shares have risen over 16% to $6.08.
Though, it is worth noting that the AGL share price remains down by 50% in 2021.
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Why is the AGL share price up 16% in a month?
There have been a couple of catalysts for the rise in the AGL share price this month.
One relates to its short interest levels. In recent weeks short sellers have been closing their positions. According to data from ASIC, just 1.48% of the company's shares are now held by short sellers.
This is a huge improvement from recent levels. For example, at the end of November just under 5% of its shares were being shorted. This itself was down from over 7% in late September.
This could be a sign that short sellers believe the AGL share price has bottomed now and its outlook is improving.
One broker that appears to believe that is the case is Ord Minnett. Last month its analysts put a buy rating and $7.55 price target on its shares. Based on the current AGL share price, this implies potential upside of 24% over the next 12 months.
The broker believes there's a lot of value in its shares at the current level. In fact, its analysts estimate that its shares are trading below the value of just its retail business. In addition, Ord Minnett notes that there's potential for this side of the business to become a takeover target.
In respect to the latter, there have been suggestions that Telstra Corporation Ltd (ASX: TLS) could be a potential suitor. Particularly given its recent entry into the energy market and aim of becoming a top five energy retailer with 0.5 million+ customers by 2025.
If an offer emerges, it could make 2022 an interesting year for AGL's shares.
