Updated from 9:45 a.m. EDT

One potential way to make a swift gain 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, 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 trading volume.

Stockpickr has combed through the heavily shorted stocks on the New York Stock Exchange and compiled the Top NYSE Short Squeeze Plays portfolio.

One of the stocks with a high short ratio is Marine Products ( MPX), the recreational fiberglass powerboats manufacturer, which has a short ratio of 53.2. The company just announced that its first-quarter earnings increased by 5% primarily due to a lower tax rate. The stock has a P/E of 17, a PEG of 2.39 and a yield of 3.3%.

Get Shrewd, Get Filthy Rich

Back in February, the company increased its dividend from 6 cents per share to 6.5 cents per share, resulting in the stock appearing in the Stockpickr portfolio called Top Dividend Increasers for the Week Ending 01-26-08. This portfolio also includes Polaris Industries ( PII), with a short ratio of 27.6; Donaldson Company ( DCI), with an 11.7 short ratio; and Canadian National Railway ( CNI), with a 3.0 ratio.

Another stock with a high short ratio is Sealy ( ZZ), the mattress and bedding products manufacturer. The stock has a short ratio of 33.8. Sealy reported better-than-expected earnings in April. Coverage was just initiated on the company by Longbow. The stock has a P/E of 8 and a PEG of 1.08.

Sealy is also owned by Stadium Capital Management, a hedge fund that identifies "businesses that generate strong cash flows, conduct deep fundamental research, develop a view of long-term value and invest with a multi-year horizon." Stadium also owns Republic Airways Holdings ( RJET), with a 5.6 short ratio; Regal Entertainment Group ( RGC), with an 11.6 ratio; and Kinetic Concepts ( KCI), with a 9.1 ratio.

F.N.B. ( FNB), another stock in the portfolio, has a short ratio of 30.8. The company just had its annual meeting last month and declared a quarterly dividend of 24 cents per share, generating a yield of 6.4%. The stock has a P/E of 13 and a PEG of 2.41.

FNB is also owned by Keefe Managers, a value investment hedge fund founded in 1991 by Harry V. Keefe Jr. Keefe also owns Bank of America ( BAC), with a 1.8 short ratio; Citigroup ( C), with a 1.4 ratio; and Zions BanCorp. ( ZION), with an 11.6 ratio. For more short-squeeze plays, check out the Top NYSE Short-Squeeze Plays portfolio at Stockpickr.com.
Stockpickr is a wholly owned subsidiary of TheStreet.com.

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