Top Short-Squeeze Plays With Low PEGs

These heavily shorted stocks with low PEG ratios have the potential to surge higher on any positive catalyst.
Author:
Publish date:

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

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 the

Top Short-Squeeze Plays With Low PEGs

portfolio, a list of stocks with high short interest and

price-earnings-to-growth ratios

of 1.8 or lower.

One of the stocks on the list is

Portfolio Recovery Associates

(PRAA) - Get Report

, 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

MuniServices

, a company that specializes in revenue enhancement for government clients. The stock has a

P/E

of 13 and a PEG of 0.87.

Portfolio Recovery is owned by

Second Curve Capital

, 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

(TNCC)

, with a 7.8 short ratio;

Capital One Financial

(COF) - Get Report

, with a short ratio of 6.6; and

RenaissanceRe Holdings

(RNR) - Get Report

, with a 3.1 ratio.

Another stock with a high short ratio is

CoStar Group

(CSGP) - Get Report

, 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

Janus Venture Fund

, 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

(ULTI)

, with a 24.7 short ratio;

Equinix

(EQIX) - Get Report

, with a 15.4 short ratio; and

Jarden

(JAH)

, with a 9.5 ratio.

LoopNet

(LOOP) - Get Report

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

Shott Capital Management

, a specialized investment firm that concentrates on distribution management, including the realization of private equity returns from venture and buyout distributions. It also owns

Google

(GOOG) - Get Report

, with a 1.4 short ratio, and

Alliance Data Systems

(ADS) - Get Report

, with a 5.3 ratio.

For more stocks with high short interest and low PEG ratios, check out the

Top Short-Squeeze Plays With Low PEGs

portfolio at Stockpickr.com.

Stockpickr is a wholly owned subsidiary of TheStreet.com.