Why You Should Buy Short Squeeze Stocks

Since the stock market has taken a few big drops recently, now might be a perfect opportunity to buy short squeeze stocks. What is a short squeeze stock, you may ask?

A short squeeze takes place when large number of short sellers have shorted a stock, and the stock comes out with unexpected good news, causing the price of the stock to spike by a huge amount, because all the short sellers have to scramble to cover their positions by buying in their shares. This mad dash to buy often generates margin calls, which causes more buying and higher prices of the stock.

Potential short squeeze plays have several metrics to compare one stock to another. One of the most popular metrics is the Short Interest Ratio, also known as the Days to Cover. This measures the number of days it would take the short sellers to cover their positions based on the average daily trading volume. The longer it would take to cover, the higher the ratio. Another analysis is the number of shares that are currently shorted as a percentage of the float (the float is the number of shares that are actively traded). The higher the percentage of shorted shares, the greater the chance that an upside surprise would drive up the price.

Here is an example. ITT Educational Services Inc. (ESI), the for-profit education company, has a short ratio of about 16. This means that if the short sellers wanted to cover their shorts, it would take them approximately 16 days to close their positions, based on the average daily trading volume. In addition, an incredible 57% of the float has been shorted. Just the slightest bit of good news could send the stock skyrocketing. The stock currently trades at nine times trailing earnings and 11 times forward earnings.

Another stock with a high short interest is j2 Global, Inc. (JCOM), the cloud computing and digital media company based at Hollywood Boulevard in California. The stock has an outrageously high short ratio of 28, which means it would take a month for the short sellers to cover. 27% of the float has been shorted. It trades at 19 times trailing earnings and 16 times forward earnings. What is interesting is that the latest reported quarterly earnings were up 16% on a 58% boost in revenues.

Obviously, there is no guarantee that good news will hit these stocks, but if it does, the rise in the price can be substantial. If you list interesting stock lists like this, check out the free stock lists at WallStreetNewsNetwork.com.

Disclosure: The author didn't own any of the above at the time the article was written.

By Stockerblog.com

Top Retailer Short Squeeze Plays for Stock Traders

A short squeeze takes place when an excessive amount of short sellers have shorted a stock, the stock comes out with good news, and the price of the stock spikes by an excessive amount, because all the short sellers have to scramble to cover their positions by buying in their shares, often due to the fact that they are getting margin calls.

Potential short squeeze plays have several metrics for comparison purposes. One of the most popular metrics is the Short Interest Ratio, also known as the Days to Cover. What this measures is the number of days it would take the short sellers to cover their positions based on the average daily trading volume. The longer it would take to cover, the higher the ratio. Another analysis is the number of shares short as a percentage of float. The higher the percentage, the greater the chance that an upside shock would drive up the price.

The retailer sector has many short squeeze plays to choose from, whether it's retailing technology or retailing food. Here are some examples. Shown is the name of the company and the short interest ratio, in other words the number of days it would take the short sellers to cover their positions based on recent volume.

Roundy's (RNDY) 18.4

Safeway (SWY) 16.1

Saks (SKS) 12.8

RadioShack (RSH) 11.6

GameStop (GME) 7.6

Barnes & Noble (BKS) 7.3

J.C. Penney (JCP) 7.3

SUPERVALU INC. (SVU) 5.5

Any positive news could cause these stocks to skyrocket.

If you like interesting stock lists like this, check out the many free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.

Top Technology Short Squeeze Plays for Stock Traders

A short squeeze takes place when an excessive amount of short sellers have shorted a stock, the stock comes out with good news, and the price of the stock spikes by an excessive amount, because all the short sellers have to scramble to cover their positions by buying in their shares, often due to the fact that they are getting margin calls.

Potential short squeeze plays have several metrics for comparison purposes. One of the most popular metrics is the Short Interest Ratio, also known as the Days to Cover. What this measures is the number of days it would take the short sellers to cover their positions based on the average daily trading volume. The longer it would take to cover, the higher the ratio. Another analysis is the shares short as a percentage of float. The higher the percentage, the greater the chance that an upside shock would drive up the price.

The technology sector has many short squeeze plays to choose from. Here are some examples. Shown is the name of the company and the short interest ratio. in other words the number of days it would take the short sellers to cover their positions based on recent volume.

Carbonite (CARB) 34.5

Ebix (EBIX) 30.4

Opentable (OPEN) 19.8

Skullcandy (SKUL) 15.4

Ubiquiti Networks (UBNT) 14.5

Magicjack Vocaltec (CALL) 10.3

GT Advanced Tech (GTAT) 8.2

The above are worth checking for the possibility of any positive news as potential trades.

If you like interesting stock lists like this, check out the many free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.

Top Biotech Short Squeeze Plays for Stock Traders

A short squeeze takes place when an excessive amount of short sellers have shorted a stock, the stock comes out with good news, and the price of the stock spikes by an excessive amount, because all the short sellers have to scramble to cover their positions by buying in their shares, often due to the fact that they are getting margin calls.

Potential short squeeze plays have several metrics for comparison purposes. One of the most popular metrics is the Short Interest Ratio, also known as the Days to Cover. What this measures is the number of days it would take the short sellers to cover their positions based on the average daily trading volume. The longer it would take to cover, the higher the ratio. Another analysis is the shares short as a percentage of float. The higher the percentage, the greater the chance that an upside shock would drive up the price.

One industry group that has a lot of volatility and is closely followed by stock traders is the biotech/pharmaceutical/healthcare sector. Many of these stocks have high short interest ratios. One example is Spectrum Pharmaceuticals (SPPI) which has about 59% of the shares short and a short interest ratio of 27. This means that if all the short sellers wanted to cover, it would take 27 days to do so based on the number of shares traded each day. The stock has a trailing and forward price to earnings ratio of 8, and earnings for the latest reported quarter of 5.2% on a 35.3% rise in revenues. It has 2.46 in cash per share. The company's primary products are ZEVALIN, a cancer therapy, and FUSILEV for patients with osteosarcoma.

Another short interest squeeze candidate Questcor Pharmaceuticals (QCOR) with a short interest ratio of 17. Also, 52.5% of the float is short. The stock trades at 10.5 times trailing earnings and 6.8 times forward earnings. Earnings for the latest reported quarter were up a substantial 143.7% on a 134.6% increase in sales. The company is a provider of prescription drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms.

Other heavily shorted healthcare stocks include Bio-Reference Laboratories (BRLI) with a short interest ratio of 25, Sequenom (SQNM) with a ratio of 12.4, and Dendreon (DNDN) at 9.7.

If you like interesting stock lists like this, check out the many free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above at the time the article was written.