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Do you consider yourself a contrarian investor, always searching for underestimated stocks? For ideas on how to start your own contrarian search, we ran a screen.

We began by screening for stocks with bearish sentiment, with float shorts above 10%. We also screened for stocks that appear undervalued relative to earnings growth, with PEG below 1.

Then we screened for those with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits, and they also have stronger control over their cost structures.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for up to six of 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 difference between pretax profit margin and industry average.

1. CEVA Inc. (NASDAQ:CEVA): Engages in designing and licensing silicon intellectual property for the handsets, portable multimedia, and consumer electronics markets. Market cap at $381.41M, most recent closing price at $16.40. Float short at 10.84%. PEG at 0.77. TTM gross margin at 94.86% vs. industry average at 60.1%. TTM operating margin at 30.32% vs. industry average at 22.28%. TTM pretax margin at 35.81% vs. industry average at 20.53%.

2. Kronos Worldwide Inc. (NYSE:KRO): Engages in the production and marketing of titanium dioxide pigments in North America and Europe. Market cap at $2.25B, most recent closing price at $19.34. Float short at 21.65%. PEG at 0.71. TTM gross margin at 43.72% vs. industry average at 37.23%. TTM operating margin at 31.4% vs. industry average at 16.93%. TTM pretax margin at 30.29% vs. industry average at 15.95%.

3. Yongye International, Inc. (NASDAQ:YONG): Engages in the research, development, manufacture, and sale of fulvic acid based liquid and powder nutrient compounds for plants and animals, which are used in the agriculture industry in the People's Republic of China. Market cap at $157.68M, most recent closing price at $3.12. Float short at 10.12%. PEG at 0.19. TTM gross margin at 59.67% vs. industry average at 37.23%. TTM operating margin at 27.05% vs. industry average at 16.93%. TTM pretax margin at 27.72% vs. industry average at 15.95%.

4. Bridgepoint Education, Inc. (NYSE:BPI): Provides postsecondary education services. Market cap at $1.01B, most recent closing price at $19.04. Float short at 18.61%. PEG at 0.52. TTM gross margin at 73.% vs. industry average at 51.79%. TTM operating margin at 26.28% vs. industry average at 19.15%. TTM pretax margin at 25.44% vs. industry average at 15.78%.

5. Weight Watchers International, Inc. (NYSE:WTW): Provides weight management services worldwide. Market cap at $4.15B, most recent closing price at $56.30. Float short at 10.61%. PEG at 0.98. TTM gross margin at 59.34% vs. industry average at 51.79%. TTM operating margin at 28.22% vs. industry average at 19.15%. TTM pretax margin at 24.95% vs. industry average at 15.78%.

6. Jos. A Bank Clothiers Inc. (NASDAQ:JOSB): Design, retails, and direct-markets men's tailored and casual clothing and accessories. Market cap at $1.27B, most recent closing price at $46.35. Float short at 12.71%. PEG at 0.87. TTM gross margin at 64.74% vs. industry average at 38.79%. TTM operating margin at 16.27% vs. industry average at 10.05%. TTM pretax margin at 16.27% vs. industry average at 9.31%.

7. RealD Inc. (NYSE:RLD): Licenses stereoscopic three-dimensional or 3D technologies internationally. Market cap at $620.8M, most recent closing price at $11.38. Float short at 13.56%. PEG at 0.9. TTM gross margin at 61.76% vs. industry average at 36.31%. TTM operating margin at 17.48% vs. industry average at 9.4%. TTM pretax margin at 17.17% vs. industry average at 10.55%.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

Source: 7 Undervalued, Highly Shorted Stocks With Strong Profitability