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When considering stocks, it's always helpful to gauge what the rest of the market thinks. One source of sentiment is the number of shares shorted. Companies seeing significant increases in shares shorted are being viewed more negatively, and vice-versa.

We ran a screen on the basic material sector for stocks seeing the most significant decreases in shares shorted month-over-month. This indicates that short sellers are becoming bullish on these stocks.

We wanted to research at least one possible fundamental signal for the bullish sentiment.

We looked through financials of over 10 companies for those with strong sales trends, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables, the healthier the company's revenue.

We screened for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.

Do you think short sellers are betting on improving top-line growth?

The List

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Use this list as a starting point for your own analysis.

1. Flotek Industries Inc. (NYSE:FTK): Provides oilfield services and equipment to the energy and mining industries.

  • Market cap at $684.44M, most recent closing price at $13.90.
  • Shares shorted have decreased from 5.55M to 5.08M over the last month, a decrease which represents about 1.15% of the company's float of 40.93M shares. Days to cover ratio at 10.68 days.
  • Revenue grew by 4.76% during the most recent quarter ($78.63M vs. $75.06M y/y). Accounts receivable grew by -5.23% during the same time period ($44.03M vs. $46.46M y/y). Receivables, as a percentage of current assets, decreased from 41.75% to 38.7% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

2. Hornbeck Offshore Services, Inc. (NYSE:HOS): Operates offshore supply vessels (OSVs), multi-purpose support vessels, and a shore-base to provide logistics support and specialty services to the offshore oil and gas exploration and production industry primarily in the United States and Gulf of Mexico.

  • Market cap at $1.38B, most recent closing price at $38.85.
  • Shares shorted have decreased from 2.64M to 2.10M over the last month, a decrease which represents about 1.69% of the company's float of 31.94M shares. Days to cover ratio at 4.39 days.
  • Revenue grew by 20.89% during the most recent quarter ($127.94M vs. $105.83M y/y). Accounts receivable grew by 4.77% during the same time period ($95.32M vs. $90.98M y/y). Receivables, as a percentage of current assets, decreased from 37.17% to 12.23% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

3. Key Energy Services Inc. (NYSE:KEG): Operates as an onshore rig-based well servicing contractor.

  • Market cap at $1.29B, most recent closing price at $8.52.
  • Shares shorted have decreased from 7.87M to 6.36M over the last month, a decrease which represents about 1.17% of the company's float of 129.24M shares. Days to cover ratio at 2.34 days.
  • Revenue grew by 4.76% during the most recent quarter ($490.85M vs. $468.54M y/y). Accounts receivable grew by -3.56% during the same time period ($427M vs. $442.74M y/y). Receivables, as a percentage of current assets, decreased from 78.14% to 67.99% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30).

*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 3 Basic Material Stocks With Bullish Short Trends