Do you consider yourself a contrarian investor, looking for stock opportunities against the herd? For ideas on how to start your own contrarian search, we ran a screen.
We began by screening for underestimated stocks, those that are technically oversold, with relative strength index readings over the last 14 days below 40. We also screened for stocks that appear undervalued relative to earnings growth, with PEG below 1.
We then screened for those with bullish sentiment from short sellers, with significant decreases in shares shorted month-over-month representing at least 2% of share float. This indicates that short sellers are less bearish on these names than they were a month ago.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.
List sorted by decrease in shares shorted month-over-month as a percent of share float.
1. Pan American Silver Corp. (PAAS): Engages in the exploration, development, extraction, processing, production, refining, reclamation, and operation of silver properties. Market cap at $2.09B, most recent closing price at $19.51. PEG at 0.54. RSI(14) at 37.4. Shares shorted have decreased from 8.79M to 4.52M over the last month, a decrease which represents about 4.17% of the company's float of 102.51M shares. Days to cover ratio at 2.49 days.
2. Deckers Outdoor Corp. (DECK): Engages in the design, production, marketing, and brand management of footwear and accessories for outdoor activities and everyday casual lifestyle use. Market cap at $1.96B, most recent closing price at $51.01. PEG at 0.53. RSI(14) at 30.95. Shares shorted have decreased from 9.35M to 8.33M over the last month, a decrease which represents about 2.7% of the company's float of 37.76M shares. Days to cover ratio at 3.47 days.
3. Vera Bradley, Inc. (VRA): Engages in the design, production, marketing, and retail of functional accessories for women under the 'Vera Bradley' brand. Market cap at $1.05B, most recent closing price at $25.98. PEG at 0.87. RSI(14) at 29.61. Shares shorted have decreased from 10.75M to 10.38M over the last month, a decrease which represents about 2.56% of the company's float of 14.48M shares. Days to cover ratio at 11.97 days.
*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.