Naturally, these plays aren't without their blemishes -- there's a reason (economic or otherwise) that these stocks are being heavily shorted. But for investors looking for exposure to a speculative play with a beefier risk/reward tradeoff, these could be powerful upside plays for the coming year.
Without further ado, here's a look at our list of large-cap short squeeze opportunities.
Royal Bank of Canada
First up is Canada's largest bank, Royal Bank of Canada (RY). With more than 15 million clients in 51 countries and over CAD 800 billion, RY is also one of the biggest diversified banks in all of North America. And just try getting this kind of yield out of a major U.S. bank -- RY currently pays out a 4.18% dividend yield. That hasn't kept short sellers from piling into this stock, however. Currently, RY's short interest ratio comes in at 22, which indicates it would take more than a month of buying pressure for short sellers to cover their bets at current levels.While Canada's financial system didn't see quite the same shakeout that we saw stateside following the recession, big banks in our neighbor to the North took plenty of cues to shore up their balance sheets and raise capital. More recently, that meant RY's exit from the U.S. banking market this year, a move a pocket of risk from its own balance sheet and use the proceeds to invest in more suitable units. Today, Royal Bank of Canada sports a relatively high quality loan book and net margins that are more comparable to a highly profitable regional bank than one of the big-three U.S. banks. While rising debt-to-income numbers for Canadian consumers is something investors should be cognizant of, the numbers aren't scary enough yet to outweigh RY's positive attributes. This stock is a very good candidate for a near-term short squeeze... Chunghwa Telecom Co. Taiwan's biggest telecom company, Chunghwa Telecom Co. (CHT), has been posting disappointing performance in 2012, with shares down slightly on the year thanks to concerns that the breakneck growth in Taiwan's economy could be coming to an end. That's also spurred short sellers to pile into this stock, shoving CHT's short interest ratio up to 24.3. But while this firm is down, it's hardly out...
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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
- Real Money + Doug Kass + 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