Updated from 8:59 a.m. EDT
One way to make a fast 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
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 the
portfolio, a list of stocks with high short interest and
of 1.8 or lower.
One of the stocks on the list is
Portfolio Recovery Associates
, which purchases and manages portfolios of defaulted consumer receivables. It has a short ratio of 54.3. The company recently announced that it will pay $24.6 million for
, a company that specializes in revenue enhancement for government clients. The stock has a
of 13 and a PEG of 0.87.
Portfolio Recovery is owned by
, an $800 million hedge fund founded in 2000 by Tom Brown. The fund has had a 20% annualized return after fees since inception. Brown also likes
Tennessee Commerce Bancorp
, with a 7.8 short ratio;
Capital One Financial
, with a short ratio of 6.6; and
, with a 3.1 ratio.
Another stock with a high short ratio is
, with a ratio of 45.2. This commercial real estate information services company reported that its first-quarter net income increased 178% vs. the same period last year on a 16.6% increase in revenues. The stock has a P/E of 45 and a PEG of 1.36.
CoStar is owned by the
, a Morningstar-rated four-star fund managed by William Bales. The fund has had an average annual return of 23.55% over the last five years. Janus also owns
Ultimate Software Group
, with a 24.7 short ratio;
, with a 15.4 short ratio; and
, with a 9.5 ratio.
is another stock with a high short interest, with a short ratio of 41.9. This operator of a commercial real estate online marketplace is the most heavily trafficked commercial real estate Web site, according to ComScore Media Metrix. The stock has a P/E of 21 and a PEG of 0.83.
LoopNet is held by
, a specialized investment firm that concentrates on distribution management, including the realization of private equity returns from venture and buyout distributions. It also owns
, with a 1.4 short ratio, and
Alliance Data Systems
, with a 5.3 ratio.
For more stocks with high short interest and low PEG ratios, check out the
portfolio at Stockpickr.com.
Stockpickr is a wholly owned subsidiary of TheStreet.com.