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To create this list we first wanted to find undervalued stocks with high performance. To do that we searched for companies that met the following criteria:

  • Market cap over $300M
  • PEG < 1 (a general signal that the stock is undervalued)
  • Trading above it's 20,50, and 200 day MA

Out screener left us with 42 names....

In light of these bullish characteristics, we further searched for those names experiencing an increased amount of short selling over the past month...

We were left with the 8 names detailed below.

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.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Short sellers seem to think these rallying names are set for a pullback--do you agree? Use the data below to start your own analysis.

1. CBIZ, Inc. (NYSE:CBZ): Business Services Industry. Market cap of $382.0M. PEG at 0.9. Shares shorted increased from 8.41M the previous month to 8.81M this month. This represents a 1.01% change in the company's 39.45M share float. The stock is a short squeeze candidate, with a short float at 21.66% (equivalent to 51.21 days of average volume). The stock has gained 10.41% over the last year.

2. Cash America International, Inc. (NYSE:CSH): Credit Services Industry. Market cap of $1.51B. PEG at 0.9. Shares shorted increased from 3.71M the previous month to 4.13M this month. This represents a 1.44% change in the company's 29.14M share float. The stock is a short squeeze candidate, with a short float at 14.21% (equivalent to 16.39 days of average volume). The stock has gained 37.88% over the last year.

3. Lithia Motors Inc. (NYSE:LAD): Auto Dealerships Industry. Market cap of $468.42M. PEG at 0.96. Shares shorted increased from 1.08M the previous month to 1.18M this month. This represents a 0.46% change in the company's 21.82M share float. The stock is a short squeeze candidate, with a short float at 5.36% (equivalent to 6.53 days of average volume). The stock has gained 123.27% over the last year.

4. Maiden Holdings, Ltd. (NASDAQ:MHLD): Property & Casualty Insurance Industry. Market cap of $674.95M. PEG at 0.8. Shares shorted increased from 1.43M the previous month to 2.29M this month. This represents a 1.7% change in the company's 50.62M share float. The stock has had a good month, gaining 17.88%.

5. NuVasive, Inc. (NASDAQ:NUVA): Medical Instruments & Supplies Industry. Market cap of $1.37B. PEG at 0.83. Shares shorted increased from 6.28M the previous month to 6.58M this month. This represents a 0.76% change in the company's 39.51M share float. The stock is a short squeeze candidate, with a short float at 16.66% (equivalent to 9.56 days of average volume). The stock has had a good month, gaining 10.7%.

6. SeaChange International Inc. (NASDAQ:SEAC): CATV Systems Industry. Market cap of $340.90M. PEG at 0.85. Shares shorted increased from 1.30M the previous month to 1.44M this month. This represents a 0.52% change in the company's 26.69M share float. The stock is a short squeeze candidate, with a short float at 5.38% (equivalent to 10.52 days of average volume). The stock has had a couple of great days, gaining 5.68% over the last week.

7. GT Solar International, Inc. (SOLR): Semiconductor Industry. Market cap of $1.68B. PEG at 0.75. Shares shorted increased from 10.24M the previous month to 14.79M this month. This represents a 3.62% change in the company's 125.58M share float. Exhibiting strong upside momentum--currently trading 7.82% above its SMA20, 18.43% above its SMA50, and 35.24% above its SMA200. The stock has had a good month, gaining 17.52%.

8. Zep, Inc. (NYSE:ZEP): Cleaning Products Industry. Market cap of $406.55M. PEG at 0.96. Shares shorted increased from 810.46K the previous month to 963.55K this month. This represents a 0.72% change in the company's 21.41M share float. The stock has had a couple of great days, gaining 6.01% over the last week.

*Short data sourced from Yahoo Finance, earnings date and all other data sourced from Finviz.

Source: Contrarian Ideas: 8 Undervalued, Rallying Stocks Targeted by Short Sellers