This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

4 Stocks With High Short Interest That Could Rise

Stocks in this article: GRPN SKUL TZOO OPEN

NEW YORK ( TheStreet) -- Shares of companies that investors are betting will fall, such as coupon seller Groupon (GRPN) and online travel-deals company Travelzoo (TZOO), may get a pop if they exceed analysts' expectations for earnings in the first quarter.

A so-called short squeeze, in which investors betting on stock-price declines buy back the shares if they rise, is a common occurrence with companies with a high short-to-cover ratio. Skullcandy (SKUL), a maker of headphones and other audio accessories, has a short-to-cover ratio of 28.1. That ratio indicates how many days, based on average daily volume, it would take all of the shorts to cover their shares and buy them back.

Company earnings have slowed, and analysts expect an increase of only 0.9% for the benchmark S&P 500, according to Sam Stovall, chief equity strategist at S&P Capital IQ. That heightens the probability of short squeezes, as investors grow more pessimistic on equities, in particular those they think will fare worse than their peers.

There are several scenarios for a short squeeze, including seasonality, but with earnings season upon us, strong earnings and solid guidance could lead these four companies higher.


Groupon has been one of the most controversial names since going public in November 2011.

As of the end of March, 23.3 million shares were held short. The stock has a 11.5 short-to-cover ratio, according to

Plagued by accounting issues since going public, shares have lost 52% of their value since they started trading, and 39% this year. Groupon recently restated fourth-quarter earnings, citing higher-priced deals. The company's auditor, Ernst & Young said it found "material weaknesses" in its internal controls.

The Chicago-based daily deals company did reiterate its first-quarter guidance, expecting between $510 million and $550 million in revenue, and income from operations of $15 million to $35 million.

Stifel Nicolaus analyst Jordan Rohan notes that third-party data suggests that January was a mediocre month for Groupon, but February was very strong. "Travel deals were one of the key factors driving a strong billings month in February," Rohan wrote in his report. He rates Groupon shares "sell."

Groupon is set to report earnings on May 14. Analysts polled by Thomson Reuters are looking for earnings of 1 cent per share on $530.82 million in revenue.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

1 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs