I'm always on the look out for stocks either in the midst of a short squeeze or poised to potentially have one, as detailed in one of my recent articles. Searching for these stocks as a starting point then reading up on why they're rallying can lead to very profitable trade ideas.
I did a screen for stocks that hit new 52 week highs on Thursday. I then further refined the list to stocks that have large short positions. 5 stocks from the result of my search are below, sorted by short ratio from highest to lowest. Use this list only as a mere first step for possible ideas warranting further research:
(1) The Boston Beer Company, Inc. (NYSE:SAM) engages in the production and sale of alcohol beverages primarily in the United States, Canada, Europe, Israel, the Caribbean, the Pacific Rim, and Mexico. It hit a new 52 week high of $134.00 on Thursday after significantly raising guidance for both 2012 and 2013. It has a short ratio of 31.2 and short interest of 2.8 million.
(2) Clearwire Corporation (CLWR) provides fourth generation wireless broadband services in the United States. The company builds and operates mobile broadband networks that offer high-speed mobile Internet and residential Internet access services. It hit a new 52 week high of $3.16 on Thursday on news that Sprint (NYSE:S) made a bid to buy them out at $2.90 per share. Speculation of a buyout closing at ultimately a higher bid is driving shares of CLWR above the offer. It has a short ratio of 4.9 and short interest of 36 million.
(3) General Mills, Inc. (NYSE:GIS) manufactures and markets branded consumer foods worldwide. It hit a new 52 week high of $41.62 on Thursday after declaring a dividend for early 2013 that is 8% higher annualized than the dividend for 2012. It has a short ratio of 4.0 and short interest of 13 million.
(4) EchoStar Corporation (NASDAQ:SATS) engages in the design, development, and distribution of digital set-top boxes and related products. It hit a new 52 week high of $33.75 on Thursday. It last had news that it and its partner DISH are "committing to the design, manufacture and sale of new energy-efficient set-top boxes (STBs)." SATS is DISH's exclusive partner. It has a short ratio of 2.8 and short interest of 403,400.
(5) The Shaw Group Inc.(NYSE:SHAW) provides technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services to multinational and national oil companies, industrial corporations, regulated utilities, and the United States government agencies worldwide. It hit a new 52 week high of $45.57 on Thursday. It had news last month of an upcoming special meeting of its shareholders to vote to be acquired by CB&I (NYSE:CBI) in a combination of cash and stock. That meeting is scheduled for December 21. It has a short ratio of 1.4 and short interest of 1.7 million.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.