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The following is a list of heavily shorted stocks with conservative accounting practices, according to the ratings developed by forensic accounting firm Audit Integrity.

Audit Integrity was founded in 2002 to develop risk management tools based on a statistical analysis of corporate integrity. The Accounting and Governance Risk (AGR) rating is a forensic measure of the transparency and reliability of a corporation’s financial reporting and governance practices. The closer the score is to 100, the more conservative the company's accounting practices, according to Audit Integrity.

All the companies in this list have high AGR scores above 85, i.e. more conservative and transparent accounting practices than most other firms. In addition, all of these stocks have short floats higher than 15%.

We last wrote about this screen on October 27, 2010. On that day, the screen produced 12 companies. Since then, 9 out of 12 companies mentioned in that article have outperformed the S&P 500 index (a success rate of 75.00%). The screen averaged a return of 12.38% vs. an index return of 4.91%. Click here to access a full breakdown of the screen's past performance.

Short float values sourced from Finviz, AGR ratings sourced from Audit Integrity.

Interactive Chart: Press Play to compare analyst ratings for the top five stocks mentioned below. Analyst ratings have been sourced from Zacks. Note: The numbers on top of the items represent the forward P/E ratio.


The list has been sorted by sorted by the AGR score.

1. Columbia Sportswear Company (COLM): Apparel Clothing Industry. Market cap of $2.05B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 98. Short float at 15.17%, which implies a short ratio of 8.84 days. The stock has gained 55.13% over the last year.

2. Skechers USA Inc. (SKX): Apparel Footwear & Accessories Industry. Market cap of $1.03B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 96. Short float at 20.7%, which implies a short ratio of 3.45 days. The stock has lost -21.87% over the last year.

3. Buckle Inc. (BKE): Apparel Stores Industry. Market cap of $1.83B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 95. Short float at 23.66%, which implies a short ratio of 12.47 days. The stock has gained 39.99% over the last year.

4. United Bankshares Inc. (UBSI): Regional Bank. Market cap of $1.18B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 95. Short float at 16.45%, which implies a short ratio of 43.63 days. The stock has gained 51.39% over the last year.

5. Veeco Instruments Inc. (VECO): Semiconductor Equipment & Materials Industry. Market cap of $1.68B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 93. Short float at 32.77%, which implies a short ratio of 6.57 days. The stock has gained 34.28% over the last year.

6. Zumiez, Inc. (ZUMZ): Apparel Stores Industry. Market cap of $891.27M. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 91. Short float at 15.9%, which implies a short ratio of 10.07 days. The stock has gained 139.97% over the last year.

7. BJ's Restaurants, Inc. (BJRI):
Restaurants Industry. Market cap of $1.01B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 89. Short float at 18.25%, which implies a short ratio of 12.87 days. The stock has gained 105.73% over the last year.

8. DSW Inc. (DSW): Apparel Stores Industry. Market cap of $1.7B. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 89. Short float at 23.27%, which implies a short ratio of 8.73 days. The stock has gained 53.45% over the last year.

9. Constant Contact, Inc. (CTCT): Marketing Services Industry. Market cap of $813.4M. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 87. Short float at 38.37%, which implies a short ratio of 32.76 days. The stock has gained 78.34% over the last year.

10. Auxilium Pharmaceuticals Inc. (AUXL): Drug Related Products Industry. Market cap of $969.47M. According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 86. Short float at 22.26%, which implies a short ratio of 14.6 days. The stock has lost -37.71% over the last year.

11. Boyd Gaming Corp. (BYD):
Resorts & Casinos Industry. Market cap of $838.16M. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 85. Short float at 31.45%, which implies a short ratio of 6.65 days. The stock has gained 11.85% over the last year.

12. Lindsay Corporation (LNN):
Farm & Construction Machinery Industry. Market cap of $865.2M. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 85. Short float at 17.91%, which implies a short ratio of 10.05 days. The stock has gained 89.54% over the last year.

13. Scholastic Corporation (SCHL):
Publishing Industry. Market cap of $1.08B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 85. Short float at 16.48%, which implies a short ratio of 12.9 days. The stock has gained 7.34% over the last year.

14. Vishay Intertechnology Inc. (VSH): Semiconductor Industry. Market cap of $2.45B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 85. Short float at 17.57%, which implies a short ratio of 6.88 days.

15. hhgregg, Inc. (HGG): Electronics Stores Industry. Market cap of $876.51M. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 82. Short float at 30.21%, which implies a short ratio of 17.4 days. The stock has gained 1.19% over the last year.

16. OpenTable, Inc. (OPEN): Business Services Industry. Market cap of $1.57B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 82. Short float at 25.67%, which implies a short ratio of 6.64 days. The stock has gained 147.53% over the last year.

17. United Rentals, Inc. (URI): Rental & Leasing Services Industry. Market cap of $1.36B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 82. Short float at 18.71%, which implies a short ratio of 5.91 days. The stock has gained 125.28% over the last year.

18. Power-One Inc. (PWER): Diversified Electronics Industry. Market cap of $1.12B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 81. Short float at 41.15%, which implies a short ratio of 5.78 days. The stock has gained 153.07% over the last year.

19. Arbitron Inc. (ARB): Marketing Services Industry. Market cap of $1.07B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 79. Short float at 17.36%, which implies a short ratio of 17.76 days. The stock has gained 81.14% over the last year.

20. P.F. Chang's China Bistro, Inc. (PFCB): Restaurants Industry. Market cap of $1.17B. According to Audit Integrity, the company has Average accounting risk, with an AGR score of 79. Short float at 28.15%, which implies a short ratio of 12.34 days. The stock has gained 38.21% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Squeeze Ideas: Highly Shorted Stocks With Conservative Accounting Practices