One more earnings short-squeeze play is Salesforce.com (CRM), which is set to release numbers on Thursday after the market close. This company is a provider of enterprise cloud computing applications. Wall Street analysts, on average, expect Salesforce.com to report revenue of $528.78 million on earnings of 30 cents per share.
This company beat Wall Street estimates last quarter after reporting in-line results the quarter prior. Salesforce.com has produced double-digit year-over-year revenue growth for the past four quarters in a row, but net income has dropped in the last two quarters.Jefferies recently made some positive comments on Saleforce.com ahead of the quarter and reiterated its buy rating and $165 price target. Jefferies thinks the company will beat billing expectations given their market checks and higher transaction volumes. The stock has been beaten down hard going into this quarter, with shares falling from a recent high of $160 a share to its current price of just over $126. The current short interest as a percentage of the float for Salesforce.com is reasonably high 8.1%. That means that out of the 122.35 million shares in the tradable float, 9.86 million are sold short by the bears. From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. Shares of CRM recently ran into some big overhead resistance at its 200-day moving average of $136.87 a share. The stock also failed before that at its 50-day moving average. That said, the stock has dropped sharply of late and it could rebound big if they report a solid quarter and guide higher. The way I would trade CRM would be to buy this stock after they report if you see hold above its recent low of $123.23 a share. If that level can hold, then you can jump into this name and add to the position if you see CRM trade above its next significant resistance level of $128.35 a share on big volume. Look for volume that's close to or greater than 2.4 million shares. I would short this stock only if it takes out $123.23 a share on big volume after it's reported their results. I would add to any short trade if it then losses $117.66 a share. Salesforce was also highlighted recently in "5 Stocks That Could Move Big on Earnings." To see more potential earnings short squeeze candidates, including Sears Holdings (SHLD), Silicon Graphics (SGI) and GameStop (GME), check out the Earnings Short Squeeze Plays portfolio on Stockpickr.
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