A short squeeze takes place when the short sellers rush to cover their short positions when a stock starts to move up. This gives traders some interesting opportunities. If a stock is heavily shorted, and there is any good news, it could really spike.One of the most common types of good news is earnings that beat analyst estimates.
Here are a few heavily stocks with coming earnings announcements. Pilgrim's Pride Corporation (PPC) has an incredible 60% of its float shorted. It has a short interest ratio of 16; this means that it would take 16 days for all the short sellers to cover their positions based on the current daily volume. The stock trades at 9 times trailing earnings and 11 times forward earnings. The company will be reporting around April 27 to May 1.
King Digital Entertainment (KING) has 26% of the float held currently short, with a days to cover ratio of 11. The stock has a current price to earnings ratio of 9 and forward PE of 8. It expects to report between May 5 an May 11.
One more stock that short sellers are all over is NeuStar, Inc. (NSR), with 57% shorted, and a short interest ratio also of 11. The stock trades at 9 times trailing earnings and 10 times forward earnings. The company will be making its earnings announcement between April 14 and April 20.
Hopefully you can make money on the long side with the right stock that has a big short position. 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.