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Investment Underground took a look at stocks with high short interest. Shorts may be wrong on these names as there is already a strong catalyst for each of them. Shares short only add fuel to the fire. Here they are:

ATP Oil and Gas (ATPG): This oil company primarily focuses on extracting oil from regions on the continental shelf that larger companies are no longer interested in. This continental strategy appears promising and has worked in the past. Apache (NYSE:APA) and Andarko Petroleum (NYSE:APC) began with the same humble beginnings as ATP, looking for cheap, proven reserves to drill profitably. Volatility has steadily reduced as fears over the BP (NYSE:BP) oil spill subside and the pace of permit approval from the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) picks up again. (We hear that BOEMRE is hiring). The stock trades at $18.59 at the time of writing and reasonably close to a break out near the 52 week high of $23.97. The 52 week low of the stock is $8.16 and the price-earnings ratio is -2.67. Earnings per share were negative last year given ATPG's capex program and collateral costs from the BP spill. We think ATP is ripe for a short squeeze.

GMX Resources (GMXR): Unlike ATP, GMX Resources focuses on land-based continental oil and gas exploration. As tensions in the Middle East ease and oil prices percolate through to earnings, GMX will pick up profits from its prescient purchases in the Niobrara and Bakken shale oil plays. The company recently opened an office in Denver to provide support for these drilling operations. We think GMX could get 25% of revenues from oil by 2013. The company posted a loss of $141.41M in 2010 and analysts have bleak expectations for next quarter. GMX is following in the shoes of Sandridge Energy (NYSE:SD), which started as a natural gas driller and then purchased significant oil acreage with Arena Resources. We think GMX got a better deal, and it is only a matter of time before shorts face potential upside surprises from GMX. The current price of the stock is $5.59.

PF Chang’s China Bistro (NASDAQ:PFCB): Earlier in the month, a press release mentioned concerns over the employment of illegal immigrants at PF Chang’s restaurants in Arizona. This is expected to reduce the first quarter earnings of the company and reflects a negative trend that could persist throughout the quarter. There are also fears that this could spread to other stores and draw more negative attention to the company. The stock trades at $45.32 at the time of this writing.

Molycorp (NYSE:MCP): Molycorp specializes in rare earth products including oxides, alloys, metals, and magnets. Molycorp posted a loss of $49.08M in the 2010 fiscal year. The stock surged on Tuesday, March 22 to over $52 per share after a report that rare earth prices will increase. However, because of the inefficient mining techniques and low earnings per share we believe Molycorp will pull back in the next quarter. The stock trades at $51.66 as of this writing.

Portfolio Recovery Associates (NASDAQ:PRAA): Portfolio Recovery Associates is a debt collection agency that specializes in asset location for auto finance companies. As the economic recovery continues in the U.S., demand for debt collection services will fall and so will Portfolio Recovery’s revenue. At $82.40, the stock is close to the 52-week high and has plenty of room to fall in the next quarter. The price to earnings ratio for the company is 19.08.

Zumiez (NASDAQ:ZUMZ): Zumiez is a clothing and action sport accessory store based out of Everett, Washington. The biggest threat to the company is the consumer base they are targeting. Fashion trends vary dramatically for teens and young adults and the company has had difficulty predicting these trends in the past. They also face stiff competition from Pacific Sunwear (NASDAQ:PSUN) who has more stores and better brand recognition. Zumies is currently trading at $23.19 and has a price to earnings ratio of 29.69.

Buckle (NYSE:BKE): Like Zumiez, Buckle is a clothing retailer targeting young adults and teenagers. They specialize in jeans and action sports clothing and are subject to the same fluctuations in revenue from trend changes. As the summer months approach, jean and hoodie sales will fall along with Buckle’s earnings. The stock currently has a short interest ratio of 16.69. The price of the stock as of this writing is $36.66 and the price to earnings ratio is 12.80.

First Solar (NASDAQ:FSLR): First Solar is a specialty producer of solar cells made using a thin-film semiconductor process. In the last few quarters, silicon prices have collapsed and this is allowing new competition to enter the solar cell industry. As oil prices fall and the crisis in the Middle East cools off, demand for solar will drop and consumers will become less conscious of energy prices. Solar’s reliance on government subsidies is also troubling. With significant pushes for budget cuts and reduction of government spending, it is possible that energy funding could dry up within the next quarter and send revenues tumbling. Currently, the stock trades for $149.85 per share.

Sears Holdings (NASDAQ:SHLD): Sears Holdings is a retail holding company that controls both Kmart’s and Sears’s department stores. The company has very low pre-tax profit margins (.43%) compared to its competitors like Walmart (NYSE:WMT) which has pre-tax profit margins of 5.41%. This combined with stiff competition in the retail industry leads us to believe that Sears Holdings will fall in the next quarter. The price to earnings ratio also suggests that Sears Holdings is overpriced with a ratio of 63.43. The stock currently trades at $78.50 per share.

Blackboard (NASDAQ:BBBB): Blackboard produces teaching assistance software for instructors and administrators. Open source alternatives and the potential for security risk lead us to believe that Blackboard will struggle in the next quarter. Blackboard only has one year contracts with schools and universities which leaves room for client’s to switch their software programs for the summer. The current price to earnings ratio for Blackboard is 76.25 and the price per share is $36.57.

Source: 10 Prime Short Squeeze Ideas for the 2nd Quarter