BALTIMORE (Stockpickr) -- It may sound crazy, but the stocks everyone hates could make you rich.
That's not just my opinion; the data bears it out as well. Going back over the last decade, buying heavily shorted large- and mid-cap stocks (the top two quartiles of all shortable stocks by market capitalization) would have beaten the S&P 500 by 9.28% each and every year. That's some material outperformance during a decade when decent returns were very hard to come by.
It's worth noting, though, that market cap matters a lot. Short sellers tend to be right about smaller names, with micro-caps delivering negative returns when the same strategy is used.
Garmin First up is GPS giant Garmin (GRMN). Garmin is on short sellers' perennial hate list, with a short interest ratio of 18.45 -- that number indicates that it would take short sellers close to a month to cover their short positions in this stock. Much of that animosity comes from Garmin's bread and butter: Personal GPS devices for in-car navigation. While these units fuelled Garmin's growth in years past, they've become increasingly commoditized more recently, with margins shrinking as competitors take extremely similar products to market.
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