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Another under-$10 stock that's a potential earnings short squeeze play is
Glu Mobile(GLUU - Get Report), which is set to report results on Tuesday after the market close. This company is engaged in designing, marketing and selling games for mobile phones. Wall Street analysts, on average, expect Glu Mobile to report revenue of $16.61 million on a loss of 4 cents per share.
Glu Mobile should be setting up here for a very strong quarter, also driven by Apple's strong earnings numbers. Again, Apple's core products such as its iPhone and iPad are the exact devices that Glu Mobile's games are made for. Combine that with a recent strong report from
Electronic Arts(ERTS), and we have a recipe here for a sizable beat from Glu Mobile. Electronic Arts just posted a twofold rise in net income and earnings per share from the year-earlier quarter.
The current short interest as a percentage of the float for Glu Mobile is a reasonably large 11.5%. That means that out of the 38.90 million shares in the tradable float, 5.52 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.9%, or about 156,000 shares. Since this stock has such a small float and high short interest, this name could really explode higher if the bulls get what they want.
From a technical standpoint, shares of Glu Mobile is looking very strong going into the quarter with the stock finding buying interest today right off its 50-day moving average of $5.02 a share. The stock has also been making higher lows and higher highs for the past couple of months, which is bullish price action.
The way I would play Glu Mobile is to wait until after its report, then buy the stock if it holds above $5.02 to $4.95 a share. If those levels hold up after they report, then I would be an instant buyer of this stock. I would add to any long position above $5.25 a share and then add aggressively if you see Glu Mobile break out above $6.10 a share. A move above $6.10 would be a big deal since it would mean new
52-week highs and would mark a major breakout.
I would only short Glu Mobile if you see the stock trade below $4.95 following their report on huge volume. I would add to any bearish bets below $4.50 and then $4.20 if the bears gain control of this name following earnings.
I recently included Glu Mobile on a list of
heavily shorted market-leading stocks and highlighted it in "
5 Stocks Poised for Breakouts."