BALTIMORE ( Stockpickr) -- In the financial industry, you're only as good as your data. Without the right databases, charts and research reports, investors are left flying blind -- so it's no surprise that the financial data industry is big business these days.
There are major advantages in data too. Unlike other financial stocks, financial data firms don't have exposure to lending risks or hefty capital needs, and they tend to have high switching costs built right into their products. That hasn't meant that the investment outlook has been worry-free for financial data providers, however; this week we're looking at five heavily shorted financial data stocks that could get squeezed in 2012.
In case you're not familiar with the term, a short squeeze is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing share price to skyrocket. One of the best indicators of just how high a short-squeezed stock could go is the short-interest ratio, which estimates 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.Roberto Pedone also highlighted several short-squeeze opportunities today in " 5 Earnings Stocks Poised to Pop." Naturally, these plays aren't without their blemishes -- there's a reason that these stocks are being heavily shorted. But for investors looking for exposure to a speculative play with a beefier risk/reward tradeoff, these could be powerful upside plays for the coming year. Without further ado, here's a look at our list of financial data short-squeeze opportunities for 2012.