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TheStreet Open House

Stomp the S&P With 5 Hated Stocks Ready to Pop

Stocks in this article: ASMLFASTINFYJNJMTB

Infosys

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Indian IT outsourcing firm Infosys (INFY) provides a bevy of business solutions, ranging from consulting to coding to enterprise IT integration. In the early 1980s, the firm existed simply to lure large Western companies with the promise of significantly cheaper IT work, but today Infosys has established a more robust economic moat with its 775 corporate customers. By focusing on expertise-driven businesses such as consulting, INFY has managed to justify higher-end pricing for its services -- and it's driving higher-end net profit margins in kind.

>>5 Toxic Tech Stocks You Should Sell in March

A skilled workforce of low-cost Indian programmers and consultants gives the firm pricing that competitors at home can't match, alongside expertise that's not easily recreated by other Indian firms. Infosys' primary business is still application development and maintenance -- or more specifically, helping its customers trim some of the costs associated with hiring high-salary IT programmers and developers at home. As long as the firm keeps delivering high quality code with limited frustrations, it should have little difficulty holding onto its customer Rolodex.

Even so, investors hate this stock right now. INFY's short interest ratio currently matches Johnson & Johnson's at 10.7. Despite that, the firm's debt-free balance sheet and attractive business should start shaking off more short sellers in the near-term. That should create good conditions for a short squeeze in 2013.

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