Short squeeze alert: these 10 ASX stocks could bring the pain

There's good and worrying news if you own any of the popular stocks on the following list of top short squeeze candidates. 

The worrying news is professional investors are betting heavily on your shares tumbling over earnings season for any number of reasons. 

The good news is these shares should pop if the naysayers are wrong and the companies beat expectations. 

The following list shows the average number of days it would take short sellers to cover total outstanding short positions based on the 20-day average daily volume for shares. 

For example, if a business has 1 million shares shorted on a 20-day average volume of 50,000 shares traded it would take a minimum of 20 days for short sellers to close their positions, assuming they bought all shares traded each day. 

The more days it takes to cover outstanding short positions the more likely a stock price will surge higher as the the scramble to avoid worsening losses is more intense. 

So here are the businesses and total days to cover, based on ASIC and Factset calculations as of last week. 

1. IDP Education (66 days to cover) - shorts are betting heavily against the English language testing business due to regulatory changes on international student numbers. Short sellers and shareholders should brace for turbulence when the business reports on February 23.
2. REA Group (46 days to cover) - The online property flipper has jumped nearly 10 per cent from $251.85 before its February 6 results to a record high of $275.01 on Tuesday. Shares swung wildly on results day, but have surged higher since likely as short sellers rush to close losing bets. If you needed any more evidence this list is worth paying attention to the move in REA is it. 
3.  Lifestyle Communities (43 days to cover) - is a retirement village operator traders are betting against given it has more than $300 million in net debt and no chief executive. It may have to raise capital at a discount soon, which is probably fuelling confidence shares will fall. However, the naysayers may lose their shirt if a takeover bid turns up, with Ingenia often touted as a potential partner.
4. Washington H. Soul Pattinson (42 days to cover) - the investment conglomerate has interests across retail, coal, telecommunications, and agriculture. Traders may be betting on a disappointing update with Soul Patts due to report on March 20. 
5. Eagers Automotive (41 days to cover) - the car dealership is considered vulnerable to a sales slowdown as rising living costs make Australians keep their motor vehicles longer. It reports in late February.
6. Breville Group (40 days to cover) - the kitchen appliance group reported this morning and shares are down 2.4 per cent to $36.83 late in the session. However, they fell as low as $35.40 in the morning to suggest short sellers will be happy today.
7. Domino's Pizza (38 days to cover) - shares popped 21.3 per cent on Thursday after it posted earnings and said it would close hundreds of stores in Japan. This shows how short sellers face pain if they misjudge their bets. 
8. Bapcor (36 days to cover) - the auto parts supplier has significant debt and recently wrote down the value of its retail operations. Its due to report on February 26, with the stock sliding 16 per cent over the past 12 months. 
9. Guzman y Gomez (36 days to cover) - the burritos phenomenon trades on a sky high valuation of measly profits and investors escrowed by the initial public offer have the opportunity to dump around $550 million of shares after it reports on February 21. Short sellers may be betting the escrowed investors take the opportunity to dump large amounts of shares on the market soon. Then there's the frothy valuation usually reserved for tech stocks, rather than fast-food merchants. It could get spicy next week. 
10. Corporate Travel Management (34 days to cover) is an acquisitive travel business that has been the target of short sellers before as doubters are worried about the cash generation of the business. Shares are down 21.5 per cent over the past 12 months and it could sink or fly when it reports next Wednesday.