One of the best ways to find a short-term trade is to look for a stock that has a high short ratio.

Here's why: The higher the short ratio, the more days it'll take short investors to cover their bearish bets should the stock get a jolt of good news. A heavily shorted stock has the potential to soar on any positive catalyst, because so many investors are placing bets against it.

Stockpickr has reviewed the entire list of

New York Stock Exchange

stocks and extracted the

stocks with the highest short ratios

, also called the days-to-cover ratios. These stocks are also screened for

price-to-earnings ratios below 25, P/E-to-growth (PEG) ratios, when available, of less than 2, and market caps in excess of $350 million.

At the top of the list is

Thomson

( TOC), which has a short ratio of 85. Thomson is an information service provider to the legal, accounting, health care, financial and scientific markets. The company recently reported a 118% year-over-year increase in quarterly earnings on an 11.1% increase in revenue. The stock has a P/E of 19 and a PEG of 1.6, and it pays a yield of 2.4%.

Thomson appears in the

Stickerblog.com Book Stocks

, a Stockpickr portfolio that also lists book publisher

John Wiley & Sons

(JW.A)

. Wiley is the publisher of numerous financial and investment books, including the

Dummies

how-to series. The stock has a P/E of 23 and a short ratio of 2.8. It also has a yield of 1.1%.

Another Book Stocks portfolio company is

McGraw-Hill

( MHP), which sports a P/E of 17, a PEG of 1.3 and a yield of 1.6%. In addition to publishing, the company also owns the credit rating and information service Standard & Poor's.

Second highest on the list of short squeeze stocks is

Coca-Cola Hellenic Bottling

(CCH) - Get Report

, which has a short ratio of 87. This Athens, Greece-based company, which makes and distributes Coca-Cola products throughout Europe and Nigeria, recently announced a raised 2007 earnings target, a 17% increase in second-quarter earnings and plans to increase its dividend. The stock has a P/E of 22 and a small yield of 0.9%.

Coca-Cola Hellenic is part of the

Dividend-Paying Soft Drink Stocks

, a Stockpickr portfolio that lists nonalcoholic-beverage stocks that generate a yield, such as

Coca-Cola

(KO) - Get Report

, which offers a 2.5% yield, a P/E of 24 and a PEG of 2.2.

Another stock in the Soft Drinks portfolio is

PepsiCo

(PEP) - Get Report

, which offers a yield of 2.2%. Pepsi, a favorite of Jim Cramer's, has a P/E of 19 and a PEG of 1.8.

Another high-short-ratio stock is

Simpson Manufacturing

(SSD) - Get Report

, which has a short ratio of 40. This California-based company makes and markets building and construction products.

The stock was recently downgraded by Matrix Research from buy to hold, probably one of the reasons for the large number of short-sellers -- that and the 10% drop in quarterly earnings. Simpson has a P/E of 18, a PEG of 1.2 and a yield of 1.2%.

Simpson is in the portfolio of

Royce Premier Inv Fund

(RYPRX), a four-star Morningstar-rated fund that has generated an average annual return of 18% for the last three years. The Royce fund also owns a few other high-short-ratio stocks, including

Alleghany

(Y) - Get Report

, with a 17 short ratio, and

Thor Industries

(THO) - Get Report

, with a 12.5 short ratio.

To see the entire list, check out the

Top 10 Short Squeeze Stocks

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;

click here

to send him an email.

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