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One way to gauge profitability is with the ratio EBITDA (common equity, or earnings before interest, taxes, depreciation, and amortization). This standardizes the number to allow comparisons of firms with different sizes, with increases in the ratio over time indicating increases in profitability.

We used this ratio to screen for stocks with increases in profitability, comparing trailing-twelve-month EBITDA/common equity to the company’s five-year average. We also screened for improvements in the interest coverage ratio, since this is not reflected in EBITDA. Finally, we screened for significant decreases in shares shorted month-over-month, a bullish change in 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.

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.

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

1. Dillard's Inc. (NYSE:DDS): Department Stores Industry. Market cap of $3.23B. TTM EBITDA/common equity at 0.31 vs. 5-year average at 0.18. TTM interest coverage at 5.20 vs. prior-year interest coverage at 2.99. Shares shorted have decreased from 12.09M to 8.62M, a change representing 10.98% of the company's 31.59M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.55). The stock is a short squeeze candidate, with a short float at 26.92% (equivalent to 7.55 days of average volume). The stock has had a good month, gaining 16.09%.

2. Liberty Global Inc. (NASDAQ:LBTYA): CATV Systems Industry. Market cap of $10.75B. TTM EBITDA/common equity at 1.24 vs. 5-year average at 0.59. TTM interest coverage at 1.01 vs. prior-year interest coverage at 0.48. Shares shorted have decreased from 19.40M to 5.52M, a change representing 6.74% of the company's 205.82M share float. The stock has gained 55.54% over the last year.

3. RPC Inc. (NYSE:RES): Oil & Gas Equipment & Services Industry. Market cap of $3.89B. TTM EBITDA/common equity at 0.93 vs. 5-year average at 0.59. TTM interest coverage at 101.67 vs. prior-year interest coverage at -9.51. Shares shorted have decreased from 9.85M to 8.16M, a change representing 3.35% of the company's 50.40M share float. The stock is a short squeeze candidate, with a short float at 18.78% (equivalent to 5.9 days of average volume). The stock has had a good month, gaining 22.52%.

4. AMERIGROUP Corporation (AGP): Health Care Plans Industry. Market cap of $3.60B. TTM EBITDA/common equity at 0.47 vs. 5-year average at 0.29. TTM interest coverage at 30.72 vs. prior-year interest coverage at 14.14. Shares shorted have decreased from 5.50M to 3.96M, a change representing 3.18% of the company's 48.42M share float. Might be undervalued at current levels, with a PEG ratio at 0.86, and P/FCF ratio at 7.86. The stock has had a good month, gaining 13.69%.

5. Nordson Corporation (NASDAQ:NDSN): Diversified Machinery Industry. Market cap of $3.77B. TTM EBITDA/common equity at 0.63 vs. 5-year average at 0.32. TTM interest coverage at 79.56 vs. prior-year interest coverage at -10.96. Shares shorted have decreased from 2.71M to 954.04K, a change representing 3.10% of the company's 56.64M share float. The stock has gained 87.51% over the last year.

6. IPG Photonics Corporation (NASDAQ:IPGP): Semiconductor Industry. Market cap of $3.24B. TTM EBITDA/common equity at 0.43 vs. 5-year average at 0.29. TTM interest coverage at 93.61 vs. prior-year interest coverage at 25.08. Shares shorted have decreased from 1.47M to 639.65K, a change representing 3.02% of the company's 27.54M share float. After a solid performance over the last year, IPGP has pulled back during recent sessions. The stock has had a good month, gaining 10.4%.

7. Cavium Networks, Inc. (NASDAQ:CAVM): Semiconductor Industry. Market cap of $1.92B. TTM EBITDA/common equity at 0.14 vs. 5-year average at 0.08. TTM interest coverage at 12.04 vs. prior-year interest coverage at -87.31. Shares shorted have decreased from 6.65M to 5.50M, a change representing 2.45% of the company's 46.87M share float. The stock is a short squeeze candidate, with a short float at 11.87% (equivalent to 5.58 days of average volume). The stock has gained 38.61% over the last year.

8. Brigham Exploration Co. (BEXP): Independent Oil & Gas Industry. Market cap of $3.91B. TTM EBITDA/common equity at 0.25 vs. 5-year average at 0.05. TTM interest coverage at 3.48 vs. prior-year interest coverage at 1.35. Shares shorted have decreased from 9.09M to 6.54M, a change representing 2.24% of the company's 113.91M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.86). The stock has had a couple of great days, gaining 9.59% over the last week.

9. VirnetX Holding Corp (NYSEMKT:VHC): Internet Software & Services Industry. Market cap of $1.81B. TTM EBITDA/common equity at 4.24 vs. 5-year average at 2.53. TTM interest coverage at 3.57 vs. prior-year interest coverage at -3.64. Shares shorted have decreased from 9.40M to 8.77M, a change representing 1.72% of the company's 36.54M share float. The stock is a short squeeze candidate, with a short float at 24.26% (equivalent to 5.87 days of average volume). It's been a rough couple of days for the stock, losing 5.27% over the last week. The stock has had a good month, gaining 40.2%.

10. Rockwood Holdings Inc. (NYSE:ROC): Specialty Chemicals Industry. Market cap of $4.60B. TTM EBITDA/common equity at 0.64 vs. 5-year average at 0.37. TTM interest coverage at 2.97 vs. prior-year interest coverage at 1.54. Shares shorted have decreased from 2.33M to 1.22M, a change representing 1.62% of the company's 68.40M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.75). The stock has had a good month, gaining 23.65%.

Short data sourced from Yahoo Finance, EBITDA/common equity and interest coverage data sourced from Screener.co; all other data sourced from Finviz.

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

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