By Stockpickr Staff
Posted on June 15, 2009
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Both the New York Stock Exchange and the Nasdaq reported that short interest rose in the latter part of May, by 1% on the NYSE and by 3.6% on the Nasdaq.
If the short-sellers have made a wrong bet, it could some create some short-squeeze opportunities, which cause stocks to rise sharply when short-sellers quickly buy in shares of stock to cover their positions.
The ratio for measuring short-squeeze opportunities is the short ratio, which is the number of days it would take the short sellers to cover their position based on recent average daily volume.
Stockpickr has combed through the list of stocks traded on the New York Stock Exchange and compiled a portfolio of the top NYSE short-squeeze plays for June.
One of the highest short interests of Big Board stocks is in candy company Briggs & Stratton , (BGG) which has a short ratio of 20.2. This means that is would take more than 20 days for the short-sellers to cover their positions based on the current trading volume of the stock. This manufacturer of lawn and garden equipment engines recently reported a drop in revenue of 7.2% and an earnings drop of 34.6% for the latest quarter. The stock has $489 million in debt, with only $16.5 million in cash. It pays a dividend of 2.7%, easily covered by its operating cash flow of $141.5 million.
Briggs & Stratton is owned by Arnold Van Den Berg, the founder of Van Den Berg Management, which he started in 1974. His company utilizes a value investment strategy. Other stocks owned by Van Den Berg include Dell (DELL), with a short ratio of 1.5; Office Depot (ODP), with a short ratio of 1.2; and News Corp. (NWS.A), with a 2.3 ratio.
Another NYSE stock with short-squeeze possibilities is Quest Diagnostics (DGX), a provider of diagnostic testing services, which carries a 16.2 short ratio. The company just announced that it will reaffirm its 2009 guidance for revenue growth of approximately 3% and earnings per share from continuing operations of $3.65 to $3.75. The company has $204 million in cash and $3.1 billion in total debt. It pays a small yield of 0.8%, and its operating cash flow is a fairly substantial $1.18 billion.
Quest is owned by Eminence Capital, a New York City-based hedge fund with more than $1.5 billion under management. Eminence also owns Oracle (ORCL), with a 1.3 short ratio; Cognizant Technology Solutions (CTSH), with a 1.6 short ratio; and Lockheed Martin (LMT), with a ratio of 2.3.
For more ideas, check out Top NYSE Short-Squeeze Plays at Stockpickr.com.
At the time of publication, the author was long NYX.
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