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
TheStreet Open House

5 Stocks Set to Pop on Earnings

Dollar General

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

One short-squeeze candidate in the specialty retail sector is Dollar General (DG), which is set to release numbers on Tuesday before the market open. This company operates as a discount retailer of general merchandise in the southern, southwestern, midwestern, and eastern U.S. Wall Street analysts, on average, expect Dollar General to report revenues of $3.54 billion on earnings of 48 cents per share.

A company like Dollar General that offers discounted good should be thriving and succeeding easily in this current economic environment of slow growth and anemic job growth. This company missed Wall Street estimates last quarter after beating estimates during the prior two quarters. Net income has been trending up for the past three quarters and revenues have trended higher for the past four quarters.

If this company sees a move back into a recession for the U.S., then expect them to guide higher and for the stock to surge post-earnings as the shorts cover their bets. The current short interest as a percentage of the float for Dollar General is a notable 7.7%. That means that out of the 99.06 million shares in the tradable float, 7.66 million are sold short by the bears.

From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. The stock has also just today started to break out above some near-term overhead resistance at around $33.30 a share.

One way to play this stock is to buy some out-of-the-money call options ahead of the quarter if you think this company is going to guide higher and attract some buyers. Since the stock is trending strong and not far off its 52-week high of $35.09, an options bet could pay off here. By playing the call options you risk will be defined to whatever you decide to put into the trade.

Another less risky way to play this is to simply wait until after they report and only buy the stock if it breaks out on solid volume. I would be a buyer once it trades above $35.09 on volume tracking close to or greater than its three-month average volume of 1.7 million. Keep in mind that $34 to $35 a share on this stock has marked tough resistance all year, so a breakout above those levels would be significant for the bulls.

I would only short this name if you see it drop below its 50-day moving average of $32.71 a share following their earnings report. I would add to any shorts if it then takes out its 200-day moving average of $31.30 a share, and target $29 or lower if the bears knock this lower post-earnings.

4 of 6

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

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