Updated from 8:59 a.m. EDT
One way to make a quick profit on a stock is through a short-squeeze play. A short squeeze takes place when a stock's price rises on good news and the stock's short-sellers scramble to cover their bearish positions. This short-covering, in turn, can drive the price of the stock even higher.
The ratio for measuring a short-squeeze play is the short ratio, which represents the number of days it would take a stock's short-sellers to cover their positions, based on the stock's recent trading volume.
Stockpickr has compiled a portfolio of the
for the month of July, a list of heavily shorted stocks that trade on the
and have the greatest potential to rise based on their short ratios.
One NYSE stock with a high short ratio is
, a manufacturer of building products, which has a short ratio of 58.6. The company just announced that it has acquired ProTech Systems, a New York-based manufacturer of venting products, for $7.5 million. The stock has a P/E of 19, a PEG of 21.68 and a yield of 1.6%.
Simpson is owned by
Royce & Associates
, a hedge fund that specializes in investing in smaller stocks that are trading significantly below the fund's estimate of their current worth. Royce also owns
, with a short ratio of 3.6;
, with a ratio of 2.7; and
Knight Capital Group
, with a ratio of 8.0.
Another NYSE stock with a high short ratio is
Tootsie Roll Industries
, the candy manufacturer and distributor. The stock has a short ratio of 50.9. The company reported a 34.2% drop in earnings for the latest quarter on a revenue drop of 3.2%. The stock has a P/E of 32 and a yield of 1.2%.
Tootsie Roll is also owned by
, a four-star fund managed by Robert Costomiris. The fund has had an average annual return of 19.1% over the last five years. It also holds
, with a 4.1 short ratio; another candy company,
, with a 10.4 ratio; and
, with a 3.5 ratio.
is another NYSE stock with a high short interest, with a short ratio of 38. This manufacturer of recreational vehicles reported a reduction of 21.7% in earnings for the latest quarter. The stock has a P/E of 9 and a PEG of 0.83, and it pays a yield of 1.2%.
Thor is owned by the
, which was featured in
magazine's 2007 investors' guide as one of the seven funds to own in that year. It has had an average total return of nearly 16% annually over the past 30 years. Penn Mutual also owns
, with a 1.4 short ratio, and
( WGOV), with a short ratio of 6.3. For the rest of the list, check out the
portfolio at Stockpickr.com.
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