The colossal collapse of Sears Holdings (NASDAQ: SHLD ) this week in the wake
of news that Kmart and Sears will be closing more than 100 stores was harmful to
a lot of investors' portfolios. SHLD stock gave up more than 25% in one day as
a result, pushing down the year-to-date loss to an ugly 55% in 2011. So, Sears
was the worst investment ever this year, right? Wrong. Investors just had to
know how to be on the right side of SHLD shares when the bottom fell out and
how to profit. Consider that as of the first of December, a whopping 40% of the
"float" that is, the amount of Sears Holdings stock that actually is
available for trading on the public market was held by short-side traders. That
means more than a few folks made a tidy sum on the big move down Tuesday! This
kind of short-selling can be risky and is not for everyone. Read this "
Shorting Stocks 101 " article for complete details on the ins and outs of
these trades. But if you're comfortable with the risk and want to take action,
consider these three stocks with massive short interest that could go the way of
Sears very soon: Zagg Zagg Inc. (NASDAQ: ZAGG ) is an acronym for Zealous About
Great Gadgets. This company makes accessories for smartphones, laptops and the
like a seemingly bulletproof business, considering everyone and their brother
has one of those little sleeves for their iPhone. Except there are signs
momentum might be waning. Competition is fierce, and expensive charges related
to the acquisition of competitor iFrog weighed on earnings this summer, with
shares plummeting from $15 to just $7.50 currently. The current short interest
in ZAGG stock is a hefty 45% as of the beginning of December even more than
Sears saw before its crash. Granted, the August volatility had a lot to do with
declines. And yes, revenues continue to soar, percentage-wise. The company has
gone from $5 million in annual revenue for fiscal 2007 to about $150 million
projected for fiscal 2011 but let's be honest, that kind of mammoth growth
simply can't happen again. Not unless Zagg can crank out $4.5 billion in sales
by 2015! Momentum stocks like Green Mountain (NASDAQ: GMCR ) show what happens
when share prices outpace expectations. The bears are sharpening their claws on
Zagg right now. Barnes & Noble If you think Sears was the no-brainer short of
the century, here's another one Barnes & Noble (NYSE: BKS ). The company has
managed to outlast its defunct rival, Borders, and has projected a return to
profitability in a year or so thanks to revenue that actually has risen
substantially since 2009 lows. B&N might not be disappearing with these
improvements to its business, and a lack of another big bookstore competitor
(I'm talking brick-and-mortar, not Amazon (NASDAQ: AMZN ), of course). But in
the short term, short-selling is the order of the day. BKS stock had almost 50%
short interest as of Dec. 1. If you think Sears was a clear loser based on
broader business troubles and consumer weakness, Barnes & Noble might be a
logical short-side play for you too. Many other investors seem to think so,
judging by the short interest. Sodastream Sodastream (NASDAQ: SODA )
manufactures "home beverage carbonation systems" in plain English, they
allow you to pour a fountain drink without going to a restaurant. It's
delicious, cost-effective and fun to use Sodastream gear. But short-side traders
are tasting a bubble here. As of Dec. 1, SODA stock was seeing a full 60% of its
float held short. Why? Well, Sodastream has been public for less than a year and
remains right at its IPO price around $33 after a run-up to almost $80 in July
and a spectacular crash. There isn't a very long history of earnings and
revenue, so investors are uncertain of growth. And that old cautionary tale of
Green Mountain and its Keurig coffee machines or Crocs (NASDAQ: CROX ) footwear
crops up prompting the question of whether SODA is a fad stock that is ready to
hit a ceiling. The bears aren't always right, but the crowd is betting
strongly against upside moves in this pick right now. Jeff Reeves is the editor
of InvestorPlace.com. Write him at editor@investorplace.com , follow him
on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook .
Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.
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