To create the stock list below we screened for companies with significant decreases in shares shorted month over month. This signals optimism, or rather a lack of pessimism, from short sellers – a group of investors who benefit when share price falls. [More lists: High Yield Dividend Stocks with Significant Insider Buying Activity] From there we looked for names trading below their lowest analyst target price. But because target prices are notoriously inflated, we only used the most pessimistic (the lowest) target prices, and for stocks with sufficient analyst coverage we only screened for those with 5 or more analyst ratings. Combined, these data points can be a powerful indicator that savvy-investors think these stocks are on their way up, perhaps towards the expectations set by industry analysts. The List Four stocks made the cut. Short sellers seem to think these stocks have upside to price in, an opinion supported by analysts. Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis. Read descriptions for all companies mentioned 1. Gevo, Inc. ( GEVO): Focuses on the development and commercialization of alternatives to petroleum-based products based on isobutanol produced from renewable feedstocks. Market cap at $85.4M, most recent closing price at $2.08. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $3. This implies a potential upside of 33.92% from current levels around $2.24. Shares shorted have decreased from 7.22M to 7.02M over the last month, a decrease which represents about 1.01% of the company's float of 19.72M shares. Days to cover ratio at 4.75 days. 2. Questcor Pharmaceuticals, Inc. ( QCOR): Provides prescription drugs for central nervous system and inflammatory disorders. Market cap at $1.8B, most recent closing price at $30.77. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $38. This implies a potential upside of 16.78% from current levels around $32.54.