Everyone loves a winner. It's reasonable to assume then that everyone hates a loser. Yet with investing, that's not always the case.

Contrarian investors love to pick through stocks that others have cast away. Value investors are the garbage-divers of the marketplace. Conversely, when stocks have a big run-up, some investors like to bet against them. They're called short sellers, and they bet that a stock is primed for a fall.

What goes up must come down -- or not
If a stock lands high on a short interest list, it doesn't necessarily mean there's cause for concern. Sometimes, it can even work in our favor. If the short seller made the wrong bet and the stock price rises, that person can continue losing money, so long as the stock is climbing.

So shorts tend to "cover" their positions quickly if things don't go their way, which can fuel further jumps in the stock price. That, in turn, can cause more shorts to cover, creating what's called a "short squeeze," and it can make a stock's price rise dramatically! Maybe we can use that to our advantage.

Here's a list of stocks that have some of the highest short interest ratios. The ratio measures how many days it would take for all of the shorts to cover their positions. The greater the number of days, the greater the chance shorts can be squeezed. We then turn to the collective intelligence of the Motley Fool CAPS community to learn which of these stocks -- if any -- Foolish investors think have the power to make short work of short sellers.

Last time around, Preformed Line Products (NASDAQ:PLPC) had the most number of days to cover, with 144. That's crept up now to 150 days, but its price has risen 9% since then. Is there a squeeze coming? Here's this week's list:



Days to Cover

CAPS Rating





Shenandoah Telecom (NASDAQ:SHEN)




Source Interlink (NASDAQ:SORC)




Sharper Image (NASDAQ:SHRP)




American Woodmark (NASDAQ:AMWD)




Of course, this isn't a list of stocks to buy -- or short! Maybe these stocks have some serious problems that warrant the high short interest. Maybe not. What do you think? Will they be squeezed?

Tapping the CAPS advantage
Over on CAPS, more than 25,000 investors like you are looking over these same stocks. Some they like, some they don't, and they all vote on how they feel about them. Sometimes, though, the lists of stocks that Foolish CAPS players like cross swords with those that short sellers don't.

While Fools don't seem to think too much of this bunch, there may be something to be said for American Woodmark, a maker of kitchen cabinets aimed at home remodelers. Short sellers are probably thinking the housing market's woes will deter people from fixing up their homes. Nearly 20 investors have weighed in on the cabinetmaker and only two don't think it will beat the market.

Here's what some of the bulls are saying:

  • shckr7 says American Woodmark has "Good cash flow (and is an) easy business to understand."
  • Top-rated CAPS player and all-around good Fool TMFDitty likes "the CEO's refocusing on high-margin sales and letting 'somebody else' make the low-margin sales." He notes that the shorts don't like the stock, but its strategy has been working thus far, so "I'll bet it keeps on doing so."

On the bear side, thepriceiswrong -- another all-star CAPS player -- reiterates that "construction (is) in trouble," and bets the stock will underperform.

Speak up
You've heard from the CAPS players. Now it's your turn to have a say. On Motley Fool CAPS, your opinion counts just as much as the short sellers'. Tell us what you think: Squeeze 'em till it hurts, or short 'em till the sun don't shine. May the best argument prevail!

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.