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One helpful way to gauge profitability is with the ratio EBITDA/common equity (EBITDA is earnings before interest, taxes, depreciation, and amortization). This standardizes the ratio for comparison of firms with different sizes, and also shows the return to shareholder investment.

We ran a screen on stocks seeing growth in EBITDA/common equity, comparing the trailing-twelve-month (TTM) ratio to the company’s 5-year average. Because EBITDA does not include interest payments, we also controlled for increases in interest coverage, comparing TTM interest coverage to the prior year. We then screened for companies that are also seeing decreases in shares shorted, 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.



Do you think short sellers are calling it right? Use this list as a starting-off point for your own analysis.

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 $3.17B. 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 month-over-month, a change representing 10.98% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.57). The stock is a short squeeze candidate, with a short float at 26.92% (equivalent to 7.72 days of average volume). The stock has had a good month, gaining 15.3%.

2. Liberty Global Inc. (NASDAQ:LBTYA): CATV Systems Industry. Market cap of $11.05B. 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 month-over-month, a change representing 6.74% of the company's share float. The stock has gained 52.9% over the last year.

3. RPC Inc. (NYSE:RES): Oil & Gas Equipment & Services Industry. Market cap of $3.97B. 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 month-over-month, a change representing 3.35% of the company's share float. The stock is a short squeeze candidate, with a short float at 18.78% (equivalent to 6.05 days of average volume). The stock has had a good month, gaining 18.77%.

4. AMERIGROUP Corporation (AGP): Health Care Plans Industry. Market cap of $3.54B. 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 month-over-month, a change representing 3.18% of the company's share float. Might be undervalued at current levels, with a PEG ratio at 0.84, and P/FCF ratio at 7.73. The stock has had a good month, gaining 11.02%.

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 month-over-month, a change representing 3.10% of the company's share float. The stock has gained 75.23% over the last year.

6. IPG Photonics Corporation (NASDAQ:IPGP): Semiconductor Industry. Market cap of $3.07B. 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 month-over-month, a change representing 3.02% of the company's share float. The stock has gained 287.76% over the last year.

7. Cavium Networks, Inc. (NASDAQ:CAVM): Semiconductor Industry. Market cap of $1.80B. 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 month-over-month, a change representing 2.45% of the company's share float. The stock is a short squeeze candidate, with a short float at 11.87% (equivalent to 5.34 days of average volume). It's been a rough couple of days for the stock, losing 9.1% over the last week.

8. Brigham Exploration Co. (BEXP):
Independent Oil & Gas Industry. Market cap of $3.83B. 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 month-over-month, a change representing 2.24% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.86). The stock has had a good month, gaining 21.76%.

9. VirnetX Holding Corp (NYSEMKT:VHC): Internet Software & Services Industry. Market cap of $1.72B. 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 month-over-month, a change representing 1.72% of the company's 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 7.2% over the last week. The stock has had a good month, gaining 22.27%.

10. Rockwood Holdings Inc. (NYSE:ROC): Specialty Chemicals Industry. Market cap of $4.48B. 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 month-over-month, a change representing 1.62% of the company's 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 13.22%.

11. VeriFone Systems, Inc (NYSE:PAY): Business Equipment Industry. Market cap of $3.64B. TTM EBITDA/common equity at 0.81 vs. 5-year average at 0.01. TTM interest coverage at 4.29 vs. prior-year interest coverage at 2.83. Shares shorted have decreased from 11.47M to 10.06M month-over-month, a change representing 1.61% of the company's share float. It's been a rough couple of days for the stock, losing 6.26% over the last week.

12. Polypore International Inc. (NYSE:PPO): Industrial Equipment & Components Industry. Market cap of $3.27B. TTM EBITDA/common equity at 0.55 vs. 5-year average at 0.40. TTM interest coverage at 3.26 vs. prior-year interest coverage at -0.81. Shares shorted have decreased from 1.82M to 1.13M month-over-month, a change representing 1.52% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.22). The stock has had a good month, gaining 11.55%.

13. AnnTaylor Stores Corp. (NYSE:ANN): Apparel Stores Industry. Market cap of $1.39B. TTM EBITDA/common equity at 0.55 vs. 5-year average at 0.19. TTM interest coverage at 237.83 vs. prior-year interest coverage at 9.55. Shares shorted have decreased from 9.55M to 8.97M month-over-month, a change representing 1.48% of the company's share float. The stock has gained 58.33% over the last year.

14. Skyworks Solutions Inc. (NASDAQ:SWKS): Semiconductor Industry. Market cap of $5.03B. TTM EBITDA/common equity at 0.24 vs. 5-year average at 0.13. TTM interest coverage at 135.43 vs. prior-year interest coverage at 30.03. Shares shorted have decreased from 8.84M to 6.12M month-over-month, a change representing 1.47% of the company's share float. The stock has had a couple of great days, gaining 17.9% over the last week.

15. Vishay Intertechnology Inc. (NYSE:VSH): Semiconductor Industry. Market cap of $2.44B. TTM EBITDA/common equity at 0.42 vs. 5-year average at 0.02. TTM interest coverage at 37.11 vs. prior-year interest coverage at 4.39. Shares shorted have decreased from 15.57M to 13.73M month-over-month, a change representing 1.21% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.17). The stock is a short squeeze candidate, with a short float at 9.04% (equivalent to 5.25 days of average volume). The stock has gained 66.78% over the last year.

*EBITDA/common equity and interest coverage data sourced from Screener.co, short data sourced from Yahoo! Finance, 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.

Source: 15 Stocks With Rising Profitability and Bullish Short Trends