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5 Contrarian Blue-Chip Stocks That Could Pop in 2012

Banco de Chile

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It's been a strong year for Banco de Chile (BCH), another foreign banking stock that's boasting a hefty short interest ratio right now. Shares have rallied more than 13.7% in the last 12 months, returns that look even more impressive when they're compared to the 21.6% decline that the financial sector has posted over that same period.

The Latin American banking sector has been heating up for the past several years, and BCH has been a big beneficiary. The firm dramatically increased its top and bottom lines during the recession, an impressive feat given the fact that the financial crisis had a worldwide reach. Comparatively higher rates in the Chilean market mean that BCH is able to collect some impressive margins on its banking business -- more than 31% in the firm's latest quarter.

Again, here's a case where a high dividend and currency exposure are fuelling shorts. The firm's 3.79% payout is based on earnings in Chilean pesos, another currency with a checkered past that looks less attractive given the dollar's recent strength. That said, Chile boasts a very different banking industry than ours here at home, and many investors are welcoming the peso exposure.

The firm's short ratio of 11.2 makes it a solid short candidate for 2012.

To see this week's short squeezes in action, check out the Blue Chip Short Squeeze portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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Stock quotes in this article: RY, GRPN, CPL, WM, BCH 
At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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