Squeezing the Shorts: Post-Earnings

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By Jonas Elmerraji

BALTIMORE (TheStreet) -- Earnings season can be one of the biggest catalysts for a short squeeze. When heavily shorted companies post impressive earnings numbers, it's easy for long investors to profit when shares skyrocket.

But even with earnings season behind us, there are still potential plays to be made. After all, almost any piece of news can serve as the catalyst to push stocks into short-squeeze range. Of course, some companies have more short-squeeze potential than others.

Here's what you need to know to profit from a post-earnings squeeze.

A short squeeze is the buying frenzy that ensues when a heavily shorted company starts to look attractive again to investors. As more and more of the short investors buy shares to cover their positions, share prices skyrocket. Almost anything can trigger a short squeeze: trumping earnings expectations, winning a lawsuit, unveiling a new product, even announcing a management change.

One of the best indicators of just how high a short-squeezed stock could go is the short interest ratio, which divides shares short by average daily trading volume in order to get a ballpark estimate of the number of days it would take for short-sellers to cover their positions. The higher the short ratio, the higher the potential profits when the shorts get squeezed.

With this in mind, Stockpickr has created its weekly portfolio of stocks with high short interest ratios and the catalysts to trigger a squeeze. Here's a look at this week's potential plays.