What are we looking for?
Stocks that have attracted the least amount of short sellers. Investors are unwilling to bet that the prices on these stocks will fall in the coming weeks or months.
More about today's screen
On Wednesday, we searched for the stocks on the Toronto Stock Exchange with the largest short interest ratio, which is calculated by dividing the number of shares sold short by the average daily volume of a stock. Today, we look at the other end of the spectrum, where short interest is lowest.
The screen lists those stocks that have a short interest ratio of less than one, ranked in ascending order. That means that for each of these issues, it would take less than a day of regular trading for all the short sellers to close out their positions. The screen also shows to what extent the short interest has changed over the last month. We have filtered the search by listing only the stocks that have seen an increase in short interest during that period.
What we found
Almost all the stocks in the screen are a good distance off their 52-week lows.
The list includes several companies in the energy sector, either exploring for oil or providing services to those that do. The two players at the top of the list are both from Calgary. Pure Energy Services Ltd. sells services to the oil field and Stoneham Drilling Trust provides contract drilling services to oil and gas exploration and production companies. Gold and silver exploration and production firms also fare well in the rankings.
Investors appear unwilling to bet against firms with steady and recurring streams of revenue. A & W Revenue Royalties Income Fund licenses trademarks, Mosaid Technologies Inc. licenses patented intellectual property in the areas of semiconductors and communications systems, while the Keg Royalties Income Fund collects a handsome royalty from Keg restaurants.
And one combination of demographics and market trends looks too promising to bet against: Zongshen PEM Power Systems Inc. makes electric motorcycles, electric bicycles and low-emission gas motorcycles in China.
Tomorrow, we will look at some U.S. stocks with high short interest ratios.