Top 12 Biotech Short Squeeze Stocks

The biotech industry has an extensive number of heavily shorted stocks.

When a stock has a high short ratio, it has the potential to move sharply higher on positive news. When good news starts to lift a stock's price, short-sellers are forced to scramble to cover their positions by buying in their shorted shares. That short-covering can push the stock's price even higher.

The short ratio is also known as the "days to cover" ratio, which is the number of days it would take the short-sellers to cover their positions based on the average daily volume of shares traded. We have recently updated the Biotech Short Squeezes portfolio at Stockpickr.com. Each of the dozen stocks on the list has a market cap of at least $225 million.

The biotech with the highest short ratio is Cytokinetics(CYTK Quote), a South San Francisco-based company that develops and markets small molecule drugs for treating cardiovascular diseases and cancer. It has strategic alliances with Amgen(AMGN Quote) and GlaxoSmithKline(GSK Quote).

Cytokinetics has an extremely high short ratio of 26.5, with 9.67% of the float shorted. The company has negative earnings and a price-to-sales ratio of nearly 60. Any good news would likely result in a squeeze upward.