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My first earnings short-squeeze candidate is
Comtech Telecomm(CMTL - Get Report), which is set to report its results on Tuesday after the market close. This company designs, develops and markets products, systems and services for communications solutions. Wall Street analysts, on average, expect Comtech to report revenue of $141.53 billion on earnings of 37 cents per share.
Comtech has beaten Wall Street estimates for the last two quarters and is coming off a quarter in which it beat estimates by 8 cents, reporting net income of 47 cents vs. estimates of 39 cents. If Comtech can manage to beat for this quarter and do so by another wide margin, then this stock could easily see a large short squeeze.
The current short interest as a percentage of the float for Comtech sits at around 7.7%. That means that out of the 25.42 million shares in the tradable float, 1.96 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.3%, or about 150,600 shares.
technical standpoint, this stock is just starting to move above both its 50-day and 200-day
moving average, which is bullish. The stock has also been printing higher lows and higher highs since the stock bottomed in mid-August at $24.04 a share, which is also bullish.
I would look to buy this stock after they report their earnings if the stock can manage to trigger a breakout above $28.50 to $29 share on
solid volume. Look for volume that's tracking in close to or above its three-month average action of 341,200 shares. I would target a run back toward $31 to $32 a share or possibly higher if the bulls manage to spark a short squeeze.
I would only get short this stock after earnings if it drops below $25.60 on heavy volume. Target a drop back towards $24 to $23.30 a share or possibly even lower if the bears knock this down post-earnings. If the stock losses $23.30 after earnings then it could really drop big since the next nearest support level doesn't come into play until around $19.50 a share.
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