10 Stocks Under Attack

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Since everyone loves a winner, it's reasonable to assume that everyone hates a loser -- everyone but short sellers, at least. Those contrarian investors bet that hot stocks are primed to fall and aim to turn their pessimism into potential profits.

This week, let's look at companies on the Nasdaq with the largest percentage increases in shares sold short. Combining that with the collective intelligence of Motley Fool CAPS, we'll see which of these companies Fools believe have the power to make short work of short sellers.

Company	Shares Short, July 15	Shares Short, June 30	% Change	% of Float	CAPS Rating (Out of 5)
Bookham (Nasdaq: BKHM)	8.2	1.0	708.2%	8.3%	*
Kopin (Nasdaq: KOPN)	5.0	0.8	571.0%	7.7%	*****
drugstore.com	6.7	1.0	555.2%	7.1%	**
Advanced Battery Technologies	4.3	0.7	527.1%	10.2%	**
Sanmina-SCI (Nasdaq: SANM)	39.7	7.2	450.0%	7.6%	*
SupportSoft (Nasdaq: SPRT)	3.8	0.7	432.5%	8.3%	**
CastlePoint Holdings (Nasdaq: CPHL)	2.5	0.5	374.7%	6.7%	*****
RAM Energy Resources (Nasdaq: RAME)	3.4	0.8	345.7%	5.5%	*****
Callidus Software	2.6	0.6	341.5%	8.7%	**
National Coal (Nasdaq: NCOC)	3.1	0.8	309.9%	10.3%	***

Sources: wsj.com and Motley Fool CAPS. Share counts in millions. Float = shares outstanding, minus insider-controlled shares, restricted stock, and shares held by 5% owners.

Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warrant their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain, and our 110,000-strong (and growing!) CAPS community is a good place to start.

In the coal bin
Like many other companies that rode the commodities train upward, National Coal has seen the breakdown in its share price over the past month, as many are suspecting that the bubble has burst. Yet coal isn't some four-letter word. However, after peaking at nearly $11 a share, the coal miner now trades below $7 a stub. Demand for thermal coal remains intense -- it provides nearly half of the energy needs here and nearly 80% in China. A lump of coal in your Christmas stocking might not be such a bad thing after all.

CAPS member DCMonty25 figures the selloff is overdone but that future dips and dives are possible on the road to long-term gains: "Intermediate dip, long-term outperform. Buy on the pullback, buckle in for a few bumps, enjoy the payoff in the end."

Lighting up
Bookham, a supplier of fiber-optics components, has labored on a deathbed for a while now, but an analyst's note last month suggested that bigger sales of tunable transmitters were coming to give it a second lease on life. Yet with profits still eluding it, Bookham may need to find a new way to light up its sales overall.

CAPS member mdriver78, however, sees the turnaround story taking shape, now that results are beginning to consistently beat analyst expectations.

Improving revenue picture is making the forecast for [profitability] more likely. Company generally meets or beats earnings expectations and forecast is for 15-percent per annual growth in [earnings per share]. The turn around seems to be unfolding over the last several quarters.

A short-circuit?
Another company undergoing a turnaround is electronic-manufacturing service Sanmina-SCI, which believes that it's completed its restructuring and is looking forward to the next chapter of the story. Some analysts think that with a $1 billion market cap but $8 billion in revenue, it makes for a tempting takeover target. Management remains committed to staying independent but admits that a deep-pocketed purchaser could always make an offer it couldn't refuse.

CAPS member welebrity likes Sanmina's greater focus after it sold off its non-core manufacturing assets: "Management changes, better financial strategy, and selling of non-core manufacturing to focus on OEM contract manufacturing."

Speak up
It pays to start your own research on these stocks at Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then share your views with the CAPS community. Squeeze 'em till it hurts, or short 'em till the sun don't shine? May the best argument prevail!