The recent drop in real estate and mortgage stocks pulled down a lot of other high-quality stocks, creating some potential short-squeeze trading opportunities. A short squeeze takes place when the short-sellers of a stock scramble to cover their bearish positions when the stock moves sharply upward.
A stock's short position is measured by the short-squeeze ratio, which represents the number of days it would take for the short-sellers to cover their positions based on the stock's recent daily trading volume.
Stockpickr has put together a list of the
. All of these stock price/earnings-to-growth (PEG) ratios of 3 or less and short ratios greater than 17.
One heavily shorted NYSE stock is
Kingsway Financial Services
, a Canada-based property and casualty insurance company with a short ratio of 31.2. The company just announced a plan to buy back up to 2.8 million shares of stock on the Toronto Stock Exchange. During the last 12 months, the company bought back 563,600 shares. KFS has a price/earnings (P/E) ratio of 9.2, a PEG ratio of 1.1 and a yield of 1.7%.
Kingsway stock is owned by
, a McLean, Va.-based money manager that specializes in looking for stocks for which there is a large difference between price and value. Abingdon also owns
Fidelity National Information Services
, which has a short ratio of 0.7,
, with a 6.8 short ratio, and
, which has a short ratio of 2.5.
Another high-short-ratio stock on the Big Board is aerospace and defense contractor
. The stock was downgraded in October by Suntrust from buy to neutral. Heico has a P/E of 35, a PEG ratio of 1.8 and a yield of 0.2%.
Heico shows up in the
portfolio at Stockpickr that lists the top 40 stocks according to
that have the best fundamentals. Other stocks in the portfolio are
, which has a 1.2 short ratio,
( ADCT), with a 3.1 short ratio, and
, with a 4 short ratio.
is another highly shorted NYSE stock, with a short ratio of 29.9. The company reported a $3.13 per share profit versus a loss of $1.04 last year. The stock has a P/E of 2.7 and a PEG ratio of 0.8.
HealthSouth was in the
portfolio at Stockpickr. Other stocks in this portfolio include
Enterprise Products Partners
, with a short ratio of 6.7, and
, with a short ratio of 5.
For more potential short-squeeze stocks with low PEG ratios, check out the
at Stockpickr.com. And for more ideas, 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.
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