On, Oct. 1, NYSE Euronext (NYX) completed its acquisition of the American Stock Exchange, founded in 1842, now called NYSE Alternext U.S.

The exchange has more liberal listing policies than the NYSE or the Nasdaq, so it tends to trade smaller to mid-size stocks, which are more volatile. Many of these stocks have been heavily shorted and significantly depressed, creating Amex stock-squeeze opportunities.

A short squeeze takes place when short-sellers quickly cover their bearish positions on optimistic news, which can move the price of the stock up sharply. The metric for measuring short-squeeze opportunities is the short ratio, also known as the "days-to-cover ratio," which is the number of days it would take the short-sellers to cover their positions based on recent average daily volume of the stock.

One Amex stock with a very high short ratio is Park National (PRK), an Ohio-based multibank holding company, which has a short ratio of 23.7. This means that it would take more than 23 days for the short-sellers to cover their positions on the stock. The company is currently rated hold by TheStreet.com Ratings. The U.S. Treasury has just given preliminary approval to Park's application to participate in the U.S. Treasury's Capital Purchase Program. Park National generated a $38 million third-quarter loss, and it currently pays a yield of 5.5%.

Park shows up in the Stockpickr portfolio called Top Dividend Increasers for the Week Ending 10-17-08, due to the fact that it increased its dividend by 1.1% in October. Other stocks in the portfolio include Matthews International (MATW), which raised its dividend by 8.3% and has a short ratio of 7.7; Wilmington Trust (WL), with a short ratio of 13.5; and PPG Industries (PPG), which has a 1.6 short ratio and was recently downgraded by TheStreet.com Ratings from buy to hold in spite of such strengths as "robust revenue growth, and good cash flow from operations".

Another heavily shorted stock is the very high-priced Seaboard (SEB), one of the top pork producers, which sells for a little less than $1,000 a share. It has a short ratio of 8. According to RealMoney's, Seaboard is one of the livestock stocks that make the grade. The stock has a P/E ratio of 8 and pays a yield of 0.3%.

Seaboard is in the Stockpickr portfolio called Kansas Stocks, which lists stocks based in the American Heartland state. Other stocks in the portfolio include Embarq (EQ), with a short ratio of 1.7; Capitol Federal Financial (CFFN), with a 10.9 short ratio; and Westar Energy (WR), which has a 3.5 short ratio and is becoming more active in wind energy.

For more ideas, check out the top Amex stock-squeeze plays at Stockpickr.com.

Posted on Dec. 10, 2008