Heavily Shorted Stocks that Could Squeeze Hard if Debt Ceiling is Raised

Heavily Shorted Stocks that Could Squeeze Hard if

Debt Ceiling is Raised

uly

, 201

Staff

As a United States government debt default looks more and more like a possibility,

the amount of stocks being heavily shorted is growing. Increased confusion late this

week on Capital Hill is adding to the minority of traders betting that no deal will be

reached, and that the government will have to prioritize which bills are to be paid. A

growing consensus believe that if this does occur, our already fragile economy could

be sent into another deep recession. Congress does have a track record of meeting

deadlines at the last-minute, and the lack of any gigantic sell off yet in the major

markets world-wide means that most people still have hope. A large amount of

stocks are being heavily shorted, many due to a lackluster recovery from the last

recession, but some are being shorted more heavily than during last month. No

single sector is immune from shares being borrowed and sold, but basic materials,

services, technology and even healthcare seem to be taking the brunt of a negative

near-term outlook. We found five that are heavily shorted but still have positive

earnings. These issues could see a short squeeze scenario if a deal is reached in

congress, and if the stock market takes off as a result, two ifs that are becoming

increasingly iffy.

USU (USEC Inc.)

USEC Inc. is in the basic materials sector and the industrial metals and minerals
industry. It supplies low enriched uranium (LEU) to commercial nuclear power plants
in the United States and internationally. The company has a market cap of $415
million and a $950 million enterprise value. Of the 111 million share float, 22.5%, or
26.6 million shares are held short which is 6-7% more than during the previous
month. The company has a book value of $10.94 per share, trailing twelve month
revenues of $2 billion, and trailing twelve month EPS of $0.01. For the current year,
the company is expected to loss $0.28 cents a share, but 2012 estimates are for
earning $0.17 a share. The company is seen growing earnings at 7% a year for the
next five years.

PQ (PetroQuest Energy Inc.)

PetroQuest Energy Inc. is in the basic materials sector and the independent oil and
gas industry. It engages in the acquisition, exploration, development, and operation
of oil and gas properties in Oklahoma, Arkansas, and Texas, as well as onshore and
in the shallow waters offshore the Gulf Coast Basin. The company has a market cap
of $513 million and a $605 million enterprise value. Of the 48 million share float,
22.2%, or 10.6 million shares are held short. The company has a book value of $3.39
per share, trailing twelve month revenues of $168 million, and trailing twelve month
EPS of $0.19. For the current year, the company is expected to earn $0.41 cents a
share, and 2012 EPS is expected to be $0.69. The company is seen growing
earnings at 10% a year for the next five years.

MNI (The McClatchy Company)

The McClatchy Company is in the services sector and the newspaper publishing
industry. It operates as a newspaper publisher in the United States. The company's
newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-
Telegram, The Kansas City Star, The Charlotte Observer, and The (Raleigh) News &
Observer. The company has a market cap of $193 million and a $1.88 billion
enterprise value. Of the 39 million share float, 70%, or 28.8 million shares are held
short. The company has a book value of $2.59 per share, trailing twelve month
revenues of $1.34 billion, and trailing twelve month EPS of $0.38. For the current year,
the company is expected to earn $0.40 cents a share, but 2012 EPS is expected to be
$0.20. The company is seen growing earnings at 5% a year for the next five years.

IRDM (Iridium Communications Inc.)

Iridium Communications Inc. is in the Technology sector and the communication
equipment industry. It provides mobile voice and data communications services
through satellites to businesses, the U.S. and foreign governments, non-
governmental organizations, and consumers worldwide. The company has a market
cap of $613 million and a $709 million enterprise value. Of the 42 million share float,
23.7%, or 10 million shares are held short. The company has a book value of $9.47
per share, trailing twelve month revenues of $358 million, and trailing twelve month
EPS of $0.44. For the current year, the company is expected to earn $0.58 cents a
share, and 2012 EPS is expected to be $0.85. The company is seen growing
earnings at 17.5% a year for the next five years.

CMED (China Medical Technologies Inc.)

China Medical Technologies Inc. is in the healthcare sector and the medical
instruments and supplies industry. It develops, manufactures, and markets
advanced immunodiagnostic and molecular diagnostic products primarily in the
People's Republic of China. The company has a market cap of $201 million and a
$450 million enterprise value. Of the 20 million share float, 31%, or 6.4 million
shares are held short. The company has a book value of $9.15 per share, trailing
twelve month revenues of $130 million, and trailing twelve month EPS of $0.48. For
the current year, the company is expected to earn $1.70 cents a share, and 2012 EPS
is expected to be $2.01. The company is seen growing earnings at 20% a year for the
next five years.

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