10 Stocks Under Attack

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

This week we'll take a look at companies on the Nasdaq stock exchange with the largest number of 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.

Source: wsj.com. Share counts in millions.

Of course, this isn't a list of stocks to buy -- or short! These stocks could have serious problems that warranted their short interest, but they might also be stricken by short-term troubles. Only Foolish due diligence will tell you for certain; our 125,000-strong CAPS community offers just such a good place to start.

The short list
Consolidation is afoot in the discount brokerage business after TD AMERITRADE snatched up the investor education and brokerage site thinkorswim. Such a move may prod rivals like E*Trade Financial or Charles Schwab to start having acquisition dreams of their own. CAPS member staraman thinks that E*Trade will ultimately benefit from the market's depressed levels: With so many bargains out there, people will start to buy!

E*Trade has been badly beaten down like other financials but they have unloaded most of the exotic products that pushed financials into the current crises. Furthermore, now that the market has lost 40% of its value many stocks are screaming buys right now and that will likely encourage new investors and others that stayed on the sidelines to jump back in.

Jump-start the business
While former Intel chairman Andy Grove thinks the top chip maker ought to expand its horizons to include making car batteries, CAPS All-Star and Fool advisor TMFPlatoish finds its position in the industry, coupled with its product development, a means for achieving outperformance over the next few years.

The semiconductor market is certainly soft and I expect that to continue for awhile. I'm going to jump in here anyway. The company's positioning is very strong and the product roadmap well defined - at least in the processor area. Intel will begin making inroads into consumer electronics over the next two years and netbooks will be an interesting proving ground for the Atom chip. I like what I see in the company and the price ain't bad. Who would have thought, one could say they would be happy collecting a dividend from Intel while they waited for consumers to buy electronics again.

Don't sell yourself short
It pays to start your own research on these stocks on 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!

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