Updated from 9:15 a.m. EDT
One industry recently exhibiting a lot heavy short interest is the restaurant group. These stocks have been viewed negatively due to the high cost of commodities, especially in corn-based products due to the extensive production of ethanol.
On the plus side, this trend creates some interesting potential short-squeeze opportunities. A short squeeze takes place when a stock's short-sellers are forced to cover their bearish positions quickly as a stock's price rises on positive news. This short-covering, in turn, drives 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 daily average trading volume.
Stockpickr has come up with the
, a list of heavily shorted stocks in the sector that could rise quickly on any positive catalyst.
One of the stocks in the group with a high short ratio is
PF Chang's China Bistro
, which has a short ratio of 18. This owner and operator of P.F. Chang's China Bistro and Pei Wei Asian Diner restaurants just raised its full-year earnings forecast. Despite a decline in first-quarter earnings, results still beat Wall Street expectations. The stock has a price-to-earnings ratio (P/E) of 25 and a P/E-to-growth (PEG) ratio of 1.3.
PF Chang's stock is owned by the
, a five-star Morningstar-rated fund managed by Allen Steinkopf. The fund also holds shares of
Helix Energy Solutions
, which has a short ratio of 3.6,
, which has a short ratio of 4.6, and
, which has a short ratio of 17.
Another stock with a high short ratio is
, which has a short ratio of 19. This pizza delivery company last week reported a 68% increase in earnings and an 8.8% increase in international same-store sales as well as a 5% drop in domestic same-store sales. The stock has a P/E of 20, a PEG of 1.3 and a yield of 3.6%.
Domino's is held by
, an Illinois-based global alternative asset management firm managed by Thane Ritchie. This company, which specializes in arbitrage and relative value strategies, also invests in
, which has a 4.8 short ratio,
, which has a 3.6 short ratio, and
, with a 2 short ratio.
The Cheesecake Factory
has a 17 short ratio. The company, which owns over 130 Cheesecake Factory restaurants, just reported its first quarterly drop in profits in eight years. The stock has a P/E ratio of 22 and a 1.1 PEG ratio.
, who manages the Olstein Financial Alert Fund, has taken a bite of Cheesecake Factory. The fund also owns shares of
, which has a short ratio of 2.5,
, which has a 1.4 short ratio, and
, which has a 1.4 short ratio.
For more heavily shorted stocks, check out the
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