Short squeezes take place when the short-sellers of a stock scramble to cover their bearish positions by buying shares of the stock as it moves up in price. Short-squeeze potential is measured by the short ratio, which is the number of days it would take the short-sellers to buy in their shares based on the stock's recent trading volume.
has plenty of stocks with high short ratios to choose from, but the key is finding the ones with good financials, such as
price-to-earnings (P/E) ratios less than 25, P/E-to-growth (PEG) ratios less than 2 and market caps greater than $350 million. Fortunately, Stockpickr has done the work for you and compiled a list of the
A Nasdaq stock with a very high short ratio is
National Western Life Insurance
( NWLIA), an annuity and life insurance company with a short ratio of 79.6. Last month, the company reported third-quarter earnings of $15.6 million, or $4.28 a share, down from $16.1 million, or $4.40 a share the year before. On a non-GAAP basis, however, it generated earnings from operations of $16.6 million, or $4.55 a share, up from $15.9 million, or $4.37 a share in the previous year. The stocks has a P/E of 9.2.
National Western shows up in
, a Stockpickr portfolio that contains stocks that trade below book value. Other stocks in the portfolio include
, which has a short ratio of 2,
Platinum Underwriters Holdings
, with a short ratio of 6, and
, with a short ratio of 4.6.
Another stock with a high short ratio is
, which acquires and manages insurance companies as well as underwrites insurance risks. It has a short ratio of 39.3. In November, the Bermuda-based company reported third-quarter net earnings of $2.6 million, or 21 cents a share, down sharply from the $11 million, or $1.10 a share, it posted a year ago. The stock has a P/E of 2.2.
Enstar is a stock held by
, the very successful money manager who was a protégé of Max Heine. Price, who currently has about $1.6 billion under management, also likes
American International Group
, with a short ratio of 1.4,
Hudson City Bancorp
, with a 4.5 short ratio, and
, with a short ratio of 11.8.
, a Pennsylvania bank holding company with a short ratio of 39, is another stock with a high short ratio. The stock has a P/E of 14.4 and a PEG of 1.56.
S&T is also listed in the Stockpickr portfolio called
. Other stocks in the portfolio include
( TOC), with a very high short ratio of 104, and
Kingsway Financial Services
at a 13.9 short ratio.
For the entire list of 10 stocks, check out the
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;
to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.