BALTIMORE (Stockpickr) -- When you're looking for stocks with explosive upside potential, your first stop should be Wall Street's "hate list."
Of course, I'm talking about digging through the most heavily shorted names on the market. Stocks with massive short interest aren't just good contrarian bets -- they're also prime candidates for a short squeeze, the buying frenzy that erupts when short sellers are forced to buy back shares of a stock at a loss just to exit their trades. That increased demand for shares can cause shares of a "hate list" stock to skyrocket, fueling more buying from other short sellers.
Typically, short sellers tend to target smaller stocks that have obvious mispricing -- but that's not always the case. Sometimes, large-cap names get heavy shorting pressure as well, creating an even more interesting opportunity for investors with a contrarian bent.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV