BALTIMORE ( Stockpickr) -- Now that 2010 is well under way, it's time to take a fresh look at large-cap stocks with serious short-squeeze potential.
Large-cap stocks fared well in 2009; the S&P 500 and Dow Jones Industrial Average, broad-based indices that track the largest stocks in the market, gained 27.8% and 22.5%, respectively. But with both indices down nearly 4% on the year already, investors are understandably concerned about the chances of seeing big-name stocks move higher this year.
Truth be told, much of that anxiety is misplaced; after all, stocks actually took a deeper dive during the first few months of 2009. And with most indices registering as oversold right now, the potential for big percentage moves on a short squeeze is strong.
A short squeeze -- the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing share price to skyrocket -- is just the catalyst these stocks need right now.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. Each week, Stockpickr creates a 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, which focus on large-cap stocks.