With earnings and summer travel results fast approaching and the Thanksgiving and Christmas holiday travel season soon upon us, many investors are starting to look at the airlines. However, many short-sellers have taken a negative stance on these stocks and bet heavily against them.

But such a scenario creates some opportunities, because investors may be able to take advantage of these heavily shorted stocks. On any good news, strong numbers or, say, a sharp drop in gasoline prices, these stocks could rise, and rise big, as short-sellers are forced to cover their bets.

With that in mind, Stockpickr combed through the stocks in the sector with the highest short ratios and compiled the

Top 10 Airline Short Squeezes

portfolio.

As a reminder, the short ratio is the number of days it would take the short-sellers to cover their position, based on the stock's recent average daily volume. Let's take a look at some of the names on the list.

One of the airlines with the highest short ratio is

AirTran Holdings

( AAI), the holding company for AirTran Airways, which serves the eastern part of the U.S. from its hub in Atlanta. The stock has a short ratio of 10.7 with more than 27% of the float shorted.

The airline just reported that its capacity and occupancy reached an all-time record in August. The stock has a

price-to-earnings ratio of 26 and a P/E-to-growth ratio of 0.8.

AirTran shares are owned by the five-star Morningstar-rated

Gartmore Small-Cap

fund (GSXAX), which has generated an outstanding average annual return of 27% over the last three years. Gartmore also owns

Regal Entertainment Group

(RGC)

, an operator of more than 500 theaters throughout the U.S. that has a short ratio of 7.1.

Another high short-ratio airline stock is

Republic Airways Holdings

(RJET)

, which has a short ratio of 8.6 with 9% of the float shorted. The airline operates in the U.S., Canada, Mexico and the U.S. Virgin Islands.

Republic has an existing $100 million buyback program, and it just announced that it would buy back 2 million shares from WexAir LLC, a former majority stockholder. Republic's P/E is 10.5, and its PEG is 0.7.

It is interesting to note that Republic also shows up in the

Off Wall Street's Picks & Pans

portfolio, a listing of both short and long recommendations from Off Wall Street Consulting Group, an independent research firm that specializes in short-selling.

However, the firm recommended Republic as a buy, along with

SAIC

(SAI)

, the federal information technology services company, which has a short ratio of 6.1.

SkyWest

TheStreet Recommends

(SKYW) - Get Report

is another airline with a high short ratio -- 7.2, with 13.7% of the float shorted. The Utah-based airline operates flights to destinations in the U.S., Canada, Mexico and the Caribbean. It has a P/E of 10.6 and a PEG of 0.9. It even pays a small dividend of 0.5%.

SkyWest was one of

Kiplinger's 10 Stocks for 2007

, picks James Glassman considers the best buys of the year. This list also includes

Johnson & Johnson

(JNJ) - Get Report

,

Lockheed Martin

(LMT) - Get Report

and

ConocoPhillips

(COP) - Get Report

.

For the rest of the potential short-squeeze plays in this sector, check out the

Top 10 Airline Short Squeezes

at Stockpickr.com.

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

and

SuperCa$h

. 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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