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The following is a list of stocks with significant short interest and good liquidity, as measured by the company's current ratio. Of course, short-sellers do their homework, and this list can be perceived as being very risky.

To control the quality of the list, we only focused on companies that have seen positive institutional flows over the last 3 months (i.e. institutions have been net buyers of these securities over the last 3 months).

Will any of these stocks see a short-covering rally in the near-future? Maybe their upcoming earnings results will serve as a catalyst? That's why we narrowed down the list to companies that are set to report earnings over the next month.

Summary of the screen:

  • Short float of more than 10%
  • Current ratio over 2
  • Institutional transactions positive over the last 3 months
  • Earnings release scheduled over next month

Here is the list, sorted alphabetically. We've also included some charts that compare the stock's annual performance against the S&P 500 index. Looking forward to your thoughts on these ideas ...

  1. AeroVironment (NASDAQ:AVAV): Designs, develops, produces, and supports unmanned aircraft systems and efficient energy systems for various industries and governmental agencies. Short float 19.16%. Short ratio of 10.73 days. Current ratio of 6.81. Institutions, who currently own 71.47%, increased holdings by 18.54% over the last 3 months. There has been some speculation that the defense industry will go through a wave of M&A, and Motley Fool has suggested AVAV looks like a good takeover target.

Click charts below to enlarge

  1. CIENA Corp. (NYSE:CIEN): A smaller rival to Cisco (NASDAQ:CSCO), Ciena Corporation provides communications networking equipment, software, and services that support the transport, switching, aggregation, and management of voice, video, and data traffic. Short float 24.29%. Short ratio 2.97 days. Current ratio 3.18. Institutions, who currently own 95% of the stock, increased holdings by 23.23% over the last 3 months.

  1. China Medical Technologies (CMED): A medical device company, develops, manufactures, and markets advanced immunodiagnostic and molecular diagnostic products primarily in the People's Republic of China. Short float of 16.7%. Short ratio of 19.64 days. Current ratio of 4.65. Institutional investors, who currently own 40.61% of the company, increased holdings by 8.71% over the last 3 months.

  1. The Cooper Companies (NYSE:COO): Develops, manufactures, and markets healthcare products serving the vision care and women's healthcare markets worldwide. Short float 13.33%. Short ratio of 14.6 days. Current ratio of 2.37. Institutions, who currently own 95% of the stock, increased holdings by 1.72% over the last 3 months.

  1. Finisar Corp. (NASDAQ:FNSR): Develops, manufactures, and markets optical subsystems, components, and network performance test systems for high-speed data communications in the United States, Malaysia, and the People's Republic of China. Short float of 21.68%. Short ratio of 7.32 days. Current ratio of 3.17. Institutional investors, who currently own 95% of the stock, increased holdings by 52% over the last 3 months.

  1. Jos. A Bank Clothiers Inc. (NASDAQ:JOSB): Engages in designing, manufacturing, retailing, and direct marketing men's tailored and casual clothing and accessories in the United States. Short float of 17.12%. Short ratio of 7.61. Current ratio of 4.18. Institutional investors, who currently own 95% of the stock, increased holdings by 2.89% over the last 3 months.

  1. Lululemon Athletica Inc. (NASDAQ:LULU): Engages in the design, manufacture, and distribution of athletic apparel and accessories for women, men, and female youth in Canada, the United States, and Australia. Short float of 20.22%. Short ratio of 6.08. Current ratio of 5.12. Institutions, who currently own 70.49% of the company, increased holdings by 3.7% over the last 3 months.

  1. La-Z-Boy Inc (NYSE:LZB): Manufactures, markets, imports, distributes, and retails upholstery products and wood casegoods furniture products under the La-Z-Boy name in the United States and Canada. Short float 10.15%. Short ratio 5.92 days. Current ratio 2.91. Institutional investors, who currently own 81.01% of the company, increased holdings by 6.77% over the last 3 months.

  1. Martek Biosciences Corp. (MATK): Engages in the development and commercialization of nutritional products from microbial sources, including algae, fungi, and other microbes worldwide. Short float 18.21%. Short ratio of 17.57 days. Current ratio of 3.39. Institutional investors, who currently own 95% of the company, increased holdings by 3.75% over the last 3 months.

  1. The Men's Wearhouse, Inc. (NYSE:MW): Operates as a specialty retailer of men's suits in the United States and Canada. Short float of 15.66%. Short ratio of 8.02 days. Current ratio of 2.63. Institutional investors, who currently own 95% of the company, increased holdings by 6.38% over the last 3 months.

  1. Sonic Solutions (SNIC): Engages in the development of products and services that enable the creation and management of digital media content across various technology platforms. Short float 26.46%. Short ratio of 13.61 days. Current ratio of 2.24. Institutional investors, who currently own 95% of the stock, boosted holdings by 14.56% over the last 3 months.

  1. Winnebago Industries Inc. (NYSE:WGO): Manufactures motor homes, which are self-contained recreation vehicles used primarily in leisure travel and outdoor recreation activities. Short float of 18.46%. Short ratio of 12.28. Current ratio of 2.76. Institutional investors, who currently own 95% of the company, increased holdings by 4.58% over the last 3 months.

Disclosure: No positions

Source: 12 Heavily Shorted Stocks With Good Liquidity