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The Nasdaq is up 14% since bottoming on October 3rd, albeit on trading volume that is lower than average. Filtering for large short Interest versus free float on the Nasdaq Exchange, a number of companies look primed as possible buys.

A large short interest does not necessarily imply which direction shares will move, but investors may use this information as a starting point for further research.

1) Aruba Networks (NASDAQ:ARUN)

Ticker

Name

Equity Float / Float %

Equity Float (In mln shrs)

Sh Interest (In mln shrs)

(ARUN)

ARUBA NETWORKS

23.69

23.14

97.70

Up over 50% since bottoming in late-August, Aruba Networks is a wireless LAN infrastructure company that will give investors exposure to the growth in network traffic. With a current P/E of 41.58, Aruba is more expensive than F5 Networks (NASDAQ:FFIV) (P/E of 33.11) but far less expensive than Riverbed (NASDAQ:RVBD), which has a P/E of 75.52. Riverbed develops WAN optimization for networks, helping companies save money. Network infrastructure stocks will no doubt report a weak quarter: Government expenditures and weakness in Europe will sour investor sentiment for this sector. Aruba will be hit hard, but Riverbed will be hit harder. Longer-term, Aruba and Riverbed offer upside if bought on quarters where sales are reportedly weak.

2) Ciena Corp (NYSE:CIEN)

Ticker

Name

Equity Float / Float %

Equity Float (In mln shrs)

Sh Interest (In mln shrs)

(CIEN)

CIENA CORP

28.85

27.08

93.85

Closing most recently at $12.39, Ciena trades with a forward P/E of 17.21. Analysts have a target price of between $17 and $37 for the shares. Short float declined slightly by 1% to 27.08%. As previously discussed, Ciena will be one of the first companies to benefit if economic weakness is not as poor as believed.

3) Omnivision Technology

Ticker

Name

Equity Float / Float %

Equity Float (In mln shrs)

Sh Interest (In mln shrs)

(NASDAQ:OVTI)

OMNIVISION TECH

10.71

6.35

59.28

Omnivision fell hard on Friday by 9.38% to $15.95, after a website dismantled an Apple (OTC:APPL) iPhone 4S to discover that a Sony (NYSE:SNE) image sensor was being used. The company trades at a P/E of just 6.41 and has a market capitalization of under $1B. Sony is reputable for building Carl Zeiss lenses for its own product. However, Apple’s use of Sony’s image sensor does not imply that the iPhone will produce the same quality of images as that found on Sony phones. Further, Omnivision may be one of many suppliers for Apple. The company also supplies image sensors for other companies. Omnivision is a ‘buy’ at current prices.

Source: 3 Potential Buy Opportunities Amid Market Confusion