Investors can profit on declining stocks by selling them short – that is, borrowing shares from a brokerage, selling them and buying them back later. The trade is profitable if the stock price falls, or loses money if the price rises.

Bespoke Investment Group compiled a list of the five most shorted stocks that make up the Standard & Poor’s 1500, which includes all the companies in the large-cap S&P 500, mid-cap S&P 400 and small-cap S&P 600.

“Remember, if a stock has high short interest, it usually means a lot of investors think it's going to go down,” Bespoke writes on SeekingAlpha.com. “That doesn't necessarily mean the stock is bound to go down, of course. And when a heavily shorted stock experiences good news, it generally results in bigger gains because it forces shorts to cover, which adds another layer of bids to the trade.”

The following is a list of those stocks that inspire the most pessimism among investors:

Company Name, Ticker, Short Interest

Industry: Consumer Discretionary

1. Restoration Hardware, RH, 38%
2. Lumber Liquidators, LL, 38%
3. LGI Homes Inc., LGIH, 33%
4. Big Lots Inc., BIG, 29%
5. Tempur Sealy International, TPX, 28%

Consumer Staples

1. Cal-Maine Foods Inc., CALM, 40%
2. Sanderson Farms Inc. SAFM, 32%
3. Tootsie Roll Industries, TR, 28%
4. Boston Beer, SAM, 23%
5. Dean Foods Co., DF, 17%

Energy

1. Atwood Oceanics, ATW, 46%
2. Bristow Group Inc., BRS, 36%
3. Diamond Offshore Drilling, DO, 34%
4. Hornbeck Offshore, HOS, 33%
5. Synergy Resource Corp., SYRG, 29%

Financials

1. LendingTree Inc., TREE, 53%
2. BofI Holding Inc., BOFI, 42%
3. World Acceptance Corp., WRLD, 41%
4. Encore Capital Group Inc., ECPG, 28%
5. WisdomTree Investments, WETF, 26%

Health Care

1. Eagle Pharmaceuticals, EGRX, 46%
2. Air Methods Corp., AIRM, 34%
3. Innoviva Inc., INVA, 34%
4. Adeptus Health Inc., ADPT, 34%
5. Computer Programs, CPSI, 31%

Industrials

1. GATX Corp., GATX, 32%
2. Greenbrier, GBX, 30%
3. Lindsay Corp., LNN, 26%
4. Dycom Industries Inc., DY, 24%
5. Avis Budget Group, CAR, 23%

Materials

1. LSB Industries Inc., LXU, 38%
2. Century Aluminum, CENX, 25%
3. US Concrete Inc., USCR, 24%
4. Allegheny Technologies, ATI, 21%
5. Flotek Industries Inc., FTK, 21%

Real Estate

1. Forestar Group Inc., FOR, 21%
2. Alexandria Real Estate, ARE, 12%
3. Omega Healthcare, OHI, 11%
4. Cedar Realty Trust, CDR, 11%
5. LaSalle Hotel Properties, LHO, 10%

Technology

1. Stamps.com Inc., STMP, 29%
2. Ebix Inc., EBIX, 27%
3. 3D Systems Corp., DDD, 26%
4. NeuStar Inc., NSR, 24%
5. First Solar Inc., FSLR, 23%

Telecom

1. Iridium Communications, IRDM, 24%
2. Frontier Communications, FTR, 21%
3. CenturyLink Inc., CTL, 12%
4. Cogent Communications, CCOI, 11%
5. Consolidated Communications, CNSL, 6.7%

Utilities

1. Black Hills Corp., BKH, 9.1%
2. NRG Energy Inc., NRG, 7.4%
3. South Jersey Industries, SJI, 6.4%
4. PNM Resources Inc., PNM, 6%
5. Talen Energy Corp., TLN, 5.8%

Source: Bespoke Investment Group