If you are looking for a short term stock play but want the backup of turning the position into a long term investment, you might want to look at the investments that are owned by an outstanding investment professional for the long term aspect, and a high short ratio (the number of days it takes to cover a short position based on the average daily volume of shares traded) for the possibility of a short term spike.
Warren Buffett, one of the superheroes of investing, has had an outstanding track record with his Berkshire Hathaway company. Surprisingly, there are ten stocks that Buffett owns with short ratios of three or more.
The Buffett stock with the greatest short ratio is USG Corp. (USG), the gypsum and building materials manufacturer. Their short ratio is 8.2, which means that it would take more than eight days for the short sellers to cover their positions based on the number of shares that trade on a daily basis. If the short sellers want (or need) to cover their positions quickly, the price of the stock can shoot up quickly, especially since 18.2% of the float has been shorted. USG has a price to earnings ratio of 7.85 and a price earnings to growth ratio of 2.55.
Another high short ratio stock that Buffett owns is H&R Block, Inc. (HRB), the tax preparation company. The stock is currently carrying a short ratio of 7 with 7.25% of the float shorted. H&R has a P/E of 31.3 and a PEG of 1.23. The stock also has a yield of 2.5%.
Washington Post Co. (WPO) is one of the highest priced stocks, trading above 750 per share. It also happens to be a stock which Warren Buffett owns and a stock with a fairly high Days to Cover Ratio (short ratio) of 6. The P/E is 23 and a PEG of 2.15, with a yield of 1.1%.
Author does not own any of the above.
No comments:
Post a Comment