Top 10 Potential Short-Squeeze Bank Stocks

Many bank stocks have taken a beating due to the recent subprime mortgage issues that have rocked the industry. Because of their troubles, many investors have taken substantial short positions in these bank stocks.

If investors are looking to find a short-term play on a stock, one technique is to look for good stocks with a high short ratio, which is essentially the number of days, based on the average daily volume of shares traded, it would take those shorting the stock to cover their bets if the stock moves higher.

With any unexpected good news, the short-sellers would need to cover their positions, driving up the price of the shares even higher. With this in mind, Stockpickr has reviewed the bank stocks and compiled a list of the Top Potential Short-Squeeze Bank Stocks.

One bank stock with one of the highest short ratios is First Commonwealth FinancialFCF, with a short ratio of 21. This means that it could take 21 days for the short-sellers to buy to cover their positions.

The company -- which owns First Commonwealth Bank, serving western and central Pennsylvania -- recently declared its latest dividend, which went ex-dividend on Sept. 26, resulting in a yield near 5.8%. It has a price-to-earnings (P/E) ratio of 17 and a P/E-to-growth (PEG) ratio of 3.2.

First Commonwealth is also part of the Small Banks portfolio at Stockpickr, which includes US BancorpUSB with a short ratio of 2.3, and Washington MutualWM, which has a short ratio of roughly 4.