This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Set to Move Big on Earnings

Stocks in this article: KKD RT GBX PBY STZ BBBY JOSB LNN

WINDERMERE, Fla. ( Stockpickr) -- Taking a long position in a heavily shorted stock ahead of the company's earnings can produce big gains for the bulls if the short-sellers capitulate and cover their bearish bets. That's exactly what unfolded with two of my three earnings short squeeze picks last week.

Men's tailored clothing maker Jos. A Bank Clothiers (JOSB), which is famous for its "buy one, get one free" advertising promotions, posted record profits and sales, and the stock took off. On March 29, the stock was trading at around $47 a share. Following the March 31 earnings report, shares of Jos. A Bank Clothiers hit a high of $52.50. That's not a huge gain, but a profit of around $5.50 a share in a very short time frame is nothing to sneeze at.

Irrigation systems player Lindsay (LNN) was my other earnings short-squeeze trade winner, after the company reported second-quarter revenue of $120.2 million compared with Wall Street estimates of $109.8 million. Lindsay said its quarterly results beat the market due to strong demand for its irrigation systems in the U.S. and worldwide. On March 29, the stock was trading at around $75, and following the report, the stock high a high of $85.87 a share.

Related: 8 Stocks Setting Up to Break Out

My only loser last week was Krispy Kreme Doughnuts (KKD), which traded down by around 20% after the company said it had swung to a loss in its fiscal fourth quarter. Kripsy Kreme actually saw good volume on the day it was set to report, and the stock was even breaking above a descending trend line, but the technicals weren't enough to save this stock. The company flat out blew it, and the stock was punished.

Now the stock is trading right at its 200-day moving average $5.46 a share. If you want to own it, you can buy it here with a mental stop just below this key level. A mental stop means not placing a physical stop order with your broker but instead just selling it when it hits an area you want to get out at.

If you're going to trade an earnings short-squeeze candidate, make sure you're only using risk capital and that you're prepared to cut your losses quickly in case the trade doesn't work out. You'll also need to be prepared to trade outside of regular trading hours because that happens to be when most earnings reports are released.

Before we take a look at some potential earnings short-squeeze candidates, let's go over the basics. A short squeeze is a rapid increase in the price of a stock that occurs when there is a lack of supply and an excess of demand for the stock. Short squeezes happen when bears who have sold the stock short are forced to cover their position on a stock as it rises. Short sellers will cover their positions to avoid losses further losses.

Here's a look at a number of earnings-related trades, including a long, a short and a few heavily shorted stocks that could experience a big squeeze.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs