Top S&P 500 Short-Squeeze Stocks

With the many huge upward and downward spikes taking place in the stock market recently, opportunities for short-squeeze plays abound.

A short squeeze takes place when the short-sellers in a stock scramble to cover their bearish positions when that stock moves sharply upward; their buying ends up pushing shares even higher. Short positions of stocks are measured by the short-squeeze ratio, which represents the number of days it would take for the short-sellers to cover their positions based on the recent daily volume of the stock.

Stockpickr recently reviewed the stocks in the S&P 500 index, extracted the stocks that have the highest short ratios as well as price/earnings-to-growth (PEG) ratios below 2 and compiled them in the Top S&P 500 Short-Squeeze Stocks.

One of the stocks on the list is Quest Diagnostics(DGX Quote), with a short ratio of 24. This health care diagnostic-testing company just received clearance from the Food and Drug Administration for two point-of-care tests, a whole blood test and a herpes simplex type-2 virus test. The stock has a P/E ratio of 21.5, a PEG of 1.4 and a yield of 0.7%.

Quest shows up in an interesting Stockpickr portfolio called Bleak Friday's (Oct. 19, 2007) Survivors -- Part I, which includes such stocks as Hansen Medical(HNSN Quote), with a short ratio of 4.6, and IntercontinentalExchange(ICE Quote), with a 2.3 short ratio.

Jones Apparel Group(JNY Quote) is another S&P 500 stock with a high short ratio. It would take 15.7 days for the short-sellers to cover their positions based on recent trading volume. The retailer recently delivered a solid third-quarter earnings beat. The stock has a P/E of 15, a PEG of 1.4 and a yield of 2.7%.