Updated from 7:09 a.m. EDT

With many market pundits declaring a market bottom, it may prove profitable to take a look at heavily shorted stocks that have the potential to soar on positive news.

A short squeeze occurs when positive news sends short-sellers, or those betting against the stock, to scramble to cover their bearish positions. This short-covering, or buying, causes the stock to spike even higher.

The primary metric for the short squeeze is the short ratio, which represents the number of days it would take a stock's short-sellers to cover their short positions, based on the stock's average daily trading volume.

Stockpickr has compiled

Top Big Board Short-Squeeze Plays

, a list of the heavily shorted stocks that trade on the

New York Stock Exchange

and have the greatest potential to rise based on their short ratios.

One of the NYSE stocks with the highest short ratios is


(Y) - Get Report

, a property and casualty insurance company with a short ratio of 30.4. The stock has a trailing price-to-earnings (P/E) ratio of 10.6.

Alleghany appears in the portfolio of the

Royce Total Return Institutional Fund

, managed by Charles Royce. With an objective of long-term growth of capital and current income, the fund also holds


(AB) - Get Report

, with a short ratio of 1;

Reliance Steel & Aluminum

(RS) - Get Report

, with a 2.4 short ratio; and

Leucadia National


, with a 6.7 short ratio.

Another NYSE stock with a high short ratio is



, an aerospace and defense manufacturer with a short ratio of 32. The company last week posted first-quarter results that showed a sharp drop in profits but a 16% rise in sales over last year. The stock has a trailing P/E of 13.8.

GenCorp stock is owned by

Steel Partners

, a San Francisco-based hedge fund managed by Warren Lichtenstein. The fund also owns shares of



, which has a 3.8 short ratio;


(BCO) - Get Report

, which has a 4 short ratio; and

Ikon Office Solutions

( IKN), with a short ratio of 8.1.

Marine Products

(MPX) - Get Report

is another Big Board stock with a high short ratio. This manufacturer of fiberglass powerboats has a short ratio of 36.5. In January, the company approved the buyback of an additional 3 million shares of its common stock. The stock has a forward P/E of 14.5, a P/E-to-growth ratio of 2.4 and a yield of 3.1%.

Marine Products shows up in the Stockpickr portfolio called

Top Dividend Increasers for the Week Ending Jan. 26

. The portfolio also includes

Home Bancshares

(HOMB) - Get Report

, with a short ratio of 26.8, and


(DCI) - Get Report

, with a short ratio of 7.

For more heavily shorted stocks, check out the

Top Big Board Short-Squeeze Plays

at Stockpickr.com.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Gen Corp and Marine Products to be small-cap stocks. 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


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;

click here

to send him an email.

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