Cash-Generating Short-Squeeze Opportunities

BY Jonas Elmerraji | 03/31/10 - 07:21 AM EDT

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See what Jim Cramer and Stephanie Link are trading today.

Another potential short squeeze in the auto industry is Group 1 Automotive (GPI ), an $806 million car dealer that owns 98 dealerships and 24 collision centers in the U.S. and the U.K. Group 1 benefits from the same macro story that AmeriCredit is benefiting from right now -- increased car sales volume -- but the company's ambitious expansion into Europe presents its greatest growth opportunities.

A bearish view on auto sales over the past couple of years has scored Group 1 a short ratio above 10 -- and still-thin margins haven't helped to shake out bets against this stock. But improving fundamentals and a relatively liquid balance sheet mean that this dealer is well-positioned to move vehicles right now. $13.60 per share in free cash flow doesn't hurt either. With first-quarter 2010 earnings just a month away, this auto dealer should have ample opportunity to impress Wall Street in April.

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