Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

For a look into the sentiment surrounding a stock, short sellers offer a great indicator.

Here we ran a screen of companies that have seen large increases in profitability over the last 5 years. We looked for companies with trailing-twelve-month net margin at least 10% greater than the prior-year’s margin, as well as 20% greater than the 5-year average.

We then searched among these stocks for those with significant drops in shares shorted month-over-month, indicating bullish sentiment.

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

Do you think these stocks are on the right path? Use this list as a starting-off point for your own analysis.

List sorted by change in shares shorted as a percent of share float.

1. American International Group, Inc. (NYSE:AIG): Property & Casualty Insurance Industry. Market cap of $54.93B. TTM net margin at 11.56% vs. 5-year average of -19.86%. Shares shorted have decreased month-over-month from 36.68M to 27.51M, a change of -4.01% of the company's 228.47M share float. The stock has lost 1.46% over the last year.

click to enlarge images

2. Entropic Communications, Inc. (NASDAQ:ENTR): Semiconductor Industry. Market cap of $648.60M. TTM net margin at 30.62% vs. 5-year average of -19.47%. Shares shorted have decreased month-over-month from 31.93M to 30.22M, a change of -2.02% of the company's 84.76M share float. The stock is a short squeeze candidate, with a short float at 35.61% (equivalent to 10.79 days of average volume).

3. KKR Financial Holdings LLC (KFN): Asset Management Industry. Market cap of $1.75B. TTM net margin at 64.32% vs. 5-year average of -8.13%. Shares shorted have decreased month-over-month from 7.28M to 5.74M, a change of -1.03% of the company's 149.41M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.67). The stock has gained 26.48% over the last year.

4. Jazz Pharmaceuticals, Inc. (NASDAQ:JAZZ): Biotechnology Industry. Market cap of $1.10B. TTM net margin at 28.04% vs. 5-year average of -74.31%. Shares shorted have decreased month-over-month from 2.49M to 2.26M, a change of -0.96% of the company's 23.88M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.46). After a solid performance over the last year, JAZZ has pulled back during recent sessions. The stock has performed poorly over the last month, losing 10.17%.

5. TiVo Inc. (NASDAQ:TIVO): CATV Systems Industry. Market cap of $1.23B. TTM net margin at 33.69% vs. 5-year average of -6.78%. Shares shorted have decreased month-over-month from 19.91M to 18.99M, a change of -0.78% of the company's 117.49M share float. The stock has gained 33.03% over the last year.

6. Huntington Bancshares Inc. (NASDAQ:HBAN): Regional Banks Industry. Market cap of $5.35B. TTM net margin at 14.96% vs. 5-year average of -21.67%. Shares shorted have decreased month-over-month from 26.92M to 20.56M, a change of -0.74% of the company's 857.45M share float. The stock has gained 2.14% over the last year.

7. IMAX Corporation (NYSE:IMAX): Photographic Equipment & Supplies Industry. Market cap of $2.02B. TTM net margin at 33.54% vs. 5-year average of 3.28%. Shares shorted have decreased month-over-month from 3.80M to 3.43M, a change of -0.67% of the company's 54.85M share float. After a solid performance over the last year, IMAX has pulled back during recent sessions. The stock has performed poorly over the last month, losing 10.6%.

8. Quicksilver Resources Inc. (NYSE:KWK): Independent Oil & Gas Industry. Market cap of $2.54B. TTM net margin at 39.57% vs. 5-year average of 2.60%. Shares shorted have decreased month-over-month from 14.64M to 13.85M, a change of -0.59% of the company's 134.44M share float. The stock has gained 11.33% over the last year.

9. Rubicon Technology, Inc. (NASDAQ:RBCN): Semiconductor Industry. Market cap of $499.05M. TTM net margin at 44.93% vs. 5-year average of 7.14%. Shares shorted have decreased month-over-month from 8.99M to 8.89M, a change of -0.57% of the company's 17.52M share float. The stock is a short squeeze candidate, with a short float at 38.82% (equivalent to 12.57 days of average volume). The stock has performed poorly over the last month, losing 14.08%.

10. Medidata Solutions, Inc. (NASDAQ:MDSO): Healthcare Information Services Industry. Market cap of $532.97M. TTM net margin at 14.24% vs. 5-year average of -6.44%. Shares shorted have decreased month-over-month from 1.75M to 1.64M, a change of -0.51% of the company's 21.64M share float. The stock is a short squeeze candidate, with a short float at 7.66% (equivalent to 6.52 days of average volume). The stock has gained 51.45% over the last year.

*Net margin data sourced from Screener.co, short data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 10 Companies With Increasing Profitability, Bullish Short Trends