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My first earnings short-squeeze play is
Winn-Dixie Stores(WINN), which is set to report its results on Monday after the market close. This company operates as a food retailing company primarily under the Winn-Dixie banner. The company's stores offer grocery, meat, seafood, produce, deli, bakery, floral, health and beauty and other general merchandise items. Wall Street analysts, on average, expect Winn-Dixie to report earnings of 12 cents per share on revenue of $1.60 billion.
Barclays recently came out with a note where they maintained their overweight rating on this stock with a price target of $11 a share. Shares of Winn-Dixie have been beaten down big in front of the quarter, with the stock dropping from a July high of over $10 a share to its current price of around $7.30 a share. Value players are already stepping into the stock Monday ahead of the quarter with shares up over 10%.
The current short interest as a percentage of the float for Winn-Dixie is an extremely large 16.5%. That means that out of the 52.07 million shares in the tradable float, 8.6 million are sold short by the bears. This is a large short interest on a stock with a reasonably low float. If the company can report bullish earnings and guide higher, then a nice short-squeeze could develop post-earnings.
From a technical standpoint, shares of Winn-Dixie are currently trading below its 50-day moving average and right at its 200-day moving average. The stock recently found some buying support at $6.05 a share, which marks the second time in the last year the stock has found buying interest near that level.
I would look to buy this stock after they have reported earnings once it trades above its 50-day moving average of $8.02 on heavy volume. I would add to any long position once it takes out $9 a share, and target a run towards $10 a share if the bulls win the post-earnings battle. I would only short this stock after they report if the stock drops below $6 to $5.95 a share on heavy volume.