Many stocks could be ripe for a short-squeeze higher, with year-end tax-related selling and continued shorting of a significant number of stocks.
A short-squeeze takes place when unexpected positive news comes out about a heavily shorted stock, and as a result the stock moves sharply higher due to the short-sellers covering their bearish positions in the stock. A stock's short interest is measured by the short ratio, which is the number of days it would take the short-sellers to cover their positions based on the stock's recent trading volume.
Stockpickr has reviewed the stocks with the highest short ratios that have market caps over $250 million and relatively low price/earnings-to-growth (PEG) ratios (below 2). These stocks are compiled in the
One of the stocks with the highest short ratios is
Healthcare Services Group
, which provides various maintenance and cleaning services to nursing homes, retirement homes, rehabilitation centers and hospitals. The company carries a short ratio of 25. In October, the company increased its quarterly dividend by 9% to 12 cents a share, giving it a yield of 2.2%. The stock has a price-to-earnings (P/E) ratio of 31 and a PEG of 1.8.
Healthcare Services is part of the portfolio of
, a five-star Morningstar-rated fund that has generated an average annual return of more than 16% over the last three years. Alpine also owns shares of
, which has a short ratio of 1.5,
, with a 4.9 short ratio, and
, which has a 3 short ratio.
Another stock with a high short ratio is
Steak n Shake
, an Indianapolis-based owner and franchisor of restaurants throughout the U.S. Its short ratio is at 22. At the end of November, Stifel Nicolaus initiated coverage of the company with a hold rating. The stock has a P/E of 24 and a PEG of 2.8.
Steak n Shake is a stock owned by Michael Dell, founder of
, through investment vehicle MSD Capital. Dell also owns
, which has a 4 short ratio,
Time Warner Telecom
, which has a 12 short ratio, and
Dollar Thrifty Automotive Group
, with a 12 short ratio.
For the top stocks with the highest short ratios to start off the New Year, check out the
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Steak n Shake to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for
The Financial Times
and the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
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