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If you're looking for potentially undervalued stocks in a short squeeze situation, this may be an interesting starting point.

To create this list, we started with a theoretical observation about P/E ratios. If the Price / Earnings Per Share ratio is equal to some constant k, it follows that there should be a linear relationship between Price and Earnings per Share. In other words:

If P/E = K

then P = (K)(E)

If there is a mismatch between growth rates in projected earnings per share values and price, a mis-pricing may have occurred, presenting an opportunity to value investors.

All of the stocks mentioned below are short squeeze candidates with a short float greater than 15%, and a market cap above $300M. Furthermore, they have seen an increase in the current year EPS analyst projection over the last 30 days. For each of these stocks, the price change has lagged the change in EPS projections, indicating that these stocks may still have to price in some good news.

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.

Yes, this approach isn't 100% accurate. There is no reason to believe that P/E should be equal to a constant at all times (that is, after all, a simplifying assumption to build a screen). But the goal here is to give you a starting point in finding potentially undervalued stocks.

Do you think these stocks will rebound and reach their analyst target price? Use the list below as a starting point for your own analysis.

1. Qihoo 360 Technology Co. Ltd. A (NYSE:QIHU): Internet Service Providers Industry. Market cap of $2.08B. Over the last 30 days, the current year EPS consensus has increased by 9.52% (from $0.21 to $0.23) while price decreased by 37.32% (from $26.77 to $16.78). The stock is currently stuck in a downtrend, trading -23.22% below its SMA20, -34.87% below its SMA50, and -35.89% below its SMA200. It's been a rough couple of days for the stock, losing 11.98% over the last week.

2. SIGA Technologies, Inc. (NASDAQ:SIGA): Drug Manufacturers Industry. Market cap of $555.50M. Over the last 30 days, the current year EPS consensus has increased by 12.5% (from $0.24 to $0.27) while price decreased by 18.64% (from $13.36 to $10.87). Short float at 17.43% (equivalent to 11.73 days of average volume). The stock has performed poorly over the last month, losing 16.35%.

3. InterOil Corporation (NYSE:IOC): Oil & Gas Refining & Marketing Industry. Market cap of $2.57B. Over the last 30 days, the current year EPS consensus has increased by 13.16% (from $0.38 to $0.43) while price decreased by 12.11% (from $59.56 to $52.35). Short float at 16.88% (equivalent to 11.86 days of average volume). The stock has lost 27.67% over the last year.

4. Kindred Healthcare Inc. (NYSE:KND): Medical Instruments & Supplies Industry. Market cap of $865.32M. Over the last 30 days, the current year EPS consensus has increased by 11.17% (from $1.79 to $1.99) while price decreased by 12.07% (from $24.1 to $21.19). Short float at 17.25% (equivalent to 7.38 days of average volume). The stock has lost 6.4% over the last year.

5. AOL, Inc. (NYSE:AOL): Internet Information Providers Industry. Market cap of $2.12B. Over the last 30 days, the current year EPS consensus has increased by 18.92% (from $0.74 to $0.88) while price decreased by 1.06% (from $19.72 to $19.51). The stock is a short squeeze candidate, with a short float at 15.4% (equivalent to 11.03 days of average volume). The stock has lost 0.85% over the last year.

6. Zumiez, Inc. (NASDAQ:ZUMZ): Apparel Stores Industry. Market cap of $763.22M. Over the last 30 days, the current year EPS consensus has increased by 0.9% (from $1.11 to $1.12) while price decreased by 16.71% (from $29.56 to $24.62). TShort float at 26.07% (equivalent to 11.09 days of average volume). The stock has performed poorly over the last month, losing 19.01%.

7. Travelzoo Inc. (NASDAQ:TZOO): Internet Information Providers Industry. Market cap of $1.01B. Over the last 30 days, the current year EPS consensus has increased by 1.85% (from $1.62 to $1.65) while price decreased by 13.82% (from $71.91 to $61.97). The stock has had a couple of great days, gaining 9.9% over the last week. The stock has performed poorly over the last month, losing 13.85%.

8. PetroQuest Energy Inc. (NYSE:PQ): Independent Oil & Gas Industry. Market cap of $422.54M. Over the last 30 days, the current year EPS consensus has increased by 2.63% (from $0.38 to $0.39) while price decreased by 12.47% (from $7.62 to $6.67). Short float at 15.34% (equivalent to 8.72 days of average volume). The stock has lost 23.01% over the last year.

9. Veeco Instruments Inc. (NASDAQ:VECO): Semiconductor Equipment & Materials Industry. Market cap of $1.96B. Over the last 30 days, the current year EPS consensus has increased by 1.31% (from $5.33 to $5.4) while price decreased by 13.38% (from $54.72 to $47.4). This is a risky stock that is significantly more volatile than the overall market (beta = 2.44). Short float at 27.04% (equivalent to 9.49 days of average volume).

10. Bio-Reference Laboratories Inc. (NASDAQ:BRLI): Medical Laboratories & Research Industry. Market cap of $583.39M. Over the last 30 days, the current year EPS consensus has increased by 1.79% (from $1.12 to $1.14) while price decreased by 11.67% (from $23.4 to $20.67). Short float at 28.6% (equivalent to 41.11 days of average volume).

11. Mindray Medical International Limited (NYSE:MR): Medical Instruments & Supplies Industry. Market cap of $3.11B. Over the last 30 days, the current year EPS consensus has increased by 2.03% (from $1.48 to $1.51) while price decreased by 9.49% (from $28.99 to $26.24). Short float at 16.98% (equivalent to 19.26 days of average volume). The stock has gained 2.55% over the last year.

12. The Children's Place Retail Stores, Inc. (NASDAQ:PLCE): Apparel Stores Industry. Market cap of $1.16B. Over the last 30 days, the current year EPS consensus has increased by 0.31% (from $3.25 to $3.26) while price decreased by 11.11% (from $49.79 to $44.26). Short float at 19.11% (equivalent to 7.98 days of average volume). The stock has performed poorly over the last month, losing 12.45%.

13. Quality Systems Inc. (NASDAQ:QSII): Healthcare Information Services Industry. Market cap of $2.41B. Over the last 30 days, the current year EPS consensus has increased by 1.09% (from $2.76 to $2.79) while price decreased by 7.05% (from $88.76 to $82.5). Short float at 22.32% (equivalent to 21.21 days of average volume). The stock has gained 1.81% over the last year.

14. RPC Inc. (NYSE:RES): Oil & Gas Equipment & Services Industry. Market cap of $3.39B. Over the last 30 days, the current year EPS consensus has increased by 0.5% (from $2.02 to $2.03) while price decreased by 6.51% (from $24.58 to $22.98). Short float at 21.61% (equivalent to 5.91 days of average volume). The stock has lost 1.% over the last year.

15. Quidel Corp. (NASDAQ:QDEL): Diagnostic Substances Industry. Market cap of $492.91M. Over the last 30 days, the current year EPS consensus has increased by 5.88% (from $0.34 to $0.36) while price decreased by 1.07% (from $14.98 to $14.82). Short float at 19.01% (equivalent to 25.84 days of average volume). The stock has gained 26.9% over the last year.

16. Federated Investors, Inc. (NYSE:FII): Asset Management Industry. Market cap of $2.50B. Over the last 30 days, the current year EPS consensus has increased by 1.23% (from $1.62 to $1.64) while price decreased by 5.05% (from $24.96 to $23.7). The stock is a short squeeze candidate, with a short float at 15.84% (equivalent to 16.93 days of average volume). The stock has lost 8.85% over the last year.

17. GameStop Corp. (NYSE:GME): Electronics Stores Industry. Market cap of $3.71B. Over the last 30 days, the current year EPS consensus has increased by 0.34% (from $2.9 to $2.91) while price decreased by 5.8% (from $27.75 to $26.14). Might be undervalued at current levels, with a PEG ratio at 0.78, and P/FCF ratio at 7.25. Short float at 25.63% (equivalent to 7.95 days of average volume). The stock has gained 20.85% over the last year.

18. Blue Nile Inc. (NASDAQ:NILE): Catalog & Mail Order Houses Industry. Market cap of $648.25M. Over the last 30 days, the current year EPS consensus has increased by 0.95% (from $1.05 to $1.06) while price decreased by 4.49% (from $46.34 to $44.26). The stock is a short squeeze candidate, with a short float at 34.97% (equivalent to 19.89 days of average volume). The stock has lost 17.7% over the last year.

19. Coinstar Inc. (CSTR): Business Equipment Industry. Market cap of $1.58B. Over the last 30 days, the current year EPS consensus has increased by 0.67% (from $2.99 to $3.01) while price decreased by 3.57% (from $52.92 to $51.03). Short float at 40.97% (equivalent to 12.07 days of average volume). The stock has had a couple of great days, gaining 6.67% over the last week.

20. AK Steel Holding Corporation (NYSE:AKS): Steel & Iron Industry. Market cap of $1.60B. Over the last 30 days, the current year EPS consensus has increased by 0.83% (from $1.21 to $1.22) while price decreased by 2.24% (from $14.72 to $14.39). This is a risky stock that is significantly more volatile than the overall market (beta = 2.54). The stock has lost 5.92% over the last year.

*EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 20 Short Squeeze Stocks Underpriced From EPS Estimates