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
TheStreet Open House

Trade 5 Hated Names to Beat the Market

Eaton Corporation

Eaton Corporation (ETN) is a bit unique on our list today. The $17 billion power management firm currently boasts a short interest ratio of 10.6, a number that's probably as high as it is because of the firm's pending acquisition of Cooper Industries (CBE) -- many investors are shorting Eaton as half of a merger arbitrage strategy. But it's important to remember that it doesn't matter why a stock is getting shorted. A high short interest ratio alone is enough of a structural reason to cause a short squeeze.

The Cooper acquisition is a big deal for Eaton. The move stands to double ETN's size and create a lot of cost savings in the combined firm. A big part of the reason why ETN is seeing so much shorting comes from the risk premium that's been priced into shares -- with the spread between Eaton's offer price and Cooper's share price higher than investors are used to seeing, there's been a fat profit to be made for arbitrageurs. But those gains could get eroded when Eaton closes the deal later this year.

That could be an important short squeeze catalyst to watch for in the next couple of months.

Campbell Soup Company

There's no company on today's list that investors hate more than Campbell Soup Company (CPB). With a short interest ratio of 14.1, it would take very close to three weeks of buying at current volume levels for shorts to exit their bets against this stock. But all of that animosity may be misguided.

Campbell has been heavily shorted for a while now, thanks in large part to two big targets: a large dividend payout and hefty exposure to input price inflation. But short theses haven't played out as expected for this stock thus far, and they don't look likely to as CPB slowly shores up its finances. Campbell owns a portfolio of brands that includes Pace, Prego, Swanson and Pepperidge Farm in addition to its namesake label. A renewed focus on international sales has helped to break CPB from its revenue flatline, and even though so-so numbers last quarter sparked more shorts piling into shares, Campbell's next earnings call on November 20 could be a good catalyst.

In the meantime, I think that Campbell looks like a good candidate for a dividend hike in the next quarter. That boosted return should help to eat into shorts' potential profit enough to hike their stop losses higher. From a technical standpoint, if Campbell can take out the glut of sellers at $35.50, it should have much higher ground in store.

3 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 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

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