The Nasdaq Short-Squeeze Plays

For the last few months, the stocks with the highest short interest have tended to be the financial stocks. Now other industries are showing up at the top of the list, including food and manufacturing.

One way that an investor can make a quick investment gain is through a short-squeeze play. A short squeeze takes place when a stock's price rises on good news and the stock's short-sellers scramble to cover their bearish positions. This short-covering, in turn, can drive the price of the stock even higher.

The ratio for measuring a short-squeeze play is the short ratio, which represents the number of days it would take a stock's short-sellers to cover their positions, based on the stock's recent trading volume.

Stockpickr has compiled the Top Nasdaq Short-Squeeze Plays portfolio, a list of heavily shorted stocks that trade on the Nasdaq and have the greatest potential to rise based on their short ratios.

One Nasdaq stock with a high short interest is SY Bancorp(SYBT Quote), which has a short ratio of 67.1. This Kentucky-based holding company for Stock Yards Bank & Trust reported that its first-quarter net profit dropped by 12% but its loans grew by 9% year over year. The stock has a P/E of 15 and a PEG of 1.63, and it pays a yield of 2.9%, after recently declaring a 17-cent dividend.

SY Bancorp shows up in a Stockpickr portfolio called Dividend-Raisers for the Week Ending 2-23-08. Other stocks in the portfolio include CNH Global(CNH Quote), which has a short ratio of 4.7; Leggett & Platt(LEG Quote), with a 9.9 short ratio; and PPL(PPL Quote), with a 2.8 ratio.