6 Stocks Primed For A Short Squeeze

In a new report, SunGard analyst Karl Loomes looks to short interest data to find stocks that could be ripe for short squeezes under the right conditions. Here’s a breakdown of some of the names he discusses.

FedEx Corporation FDX
The company recently indicated that its proposed takeover of European rival TNT is extremely likely to gain approval by the European Commission. Loomes notes that short selling volumes have also declined by 24 percent over the past two weeks.

Weight Watchers International, Inc . WTW
The company’s share price recently doubled following the news that Oprah Winfrey has taken a 10 percent stake in the company. Short selling data indicates that a large number of traders are trying to capitalize on the overbought nature of the stock. The total number of borrowed shares has increased by 25 percent.

GoPro Inc GPRO
Loomes notes that the cost of borrowing GoPro shares has climbed from about 6.5 percent to nearly 16 percent and the total number of shares borrowed has climbed nearly 50 percent in the past month. GoPro, which reports after the closing bell on Wednesday, also has a track record of large post-earnings moves.

United States Steel Corporation X
The stock is down more than 68 percent over the past year, but the total volume of borrowed stock is up 64 percent since September 1. All these short sellers will need to cover to take profits at some point.

Chesapeake Energy Corporation CHK
Short selling data indicates that the profit-taking process may have already begun for Chesapeake sellers. Borrowing volumes are down six percent since the beginning of the month.

MannKind Corporation MNKD
The company recently announced the end of a nine million common share stock lending agreement with Bank of America Corp BAC, and the stock’s battered share price has climbed 13.2 percent over the past month. Loomes cautions that the cost of borrowing shares remains well above the 100 percent mark, indicating that a large amount of negative sentiment remains.

Disclosure: the author holds no position in the stocks mentioned.