Another potential earnings short-squeeze trade is Worthington Industries (WOR), which is set to report results on Wednesday after the market close. This is a diversified metals processing company, focused on steel value-added steel processing and manufactured metal products. Wall Street analysts, on average, expect Worthington to report revenue of $626.97 million on earnings of 39 cents per share.
This is another name that the bears have destroyed in front of the quarter, since shares are down sharply from the July highs at $23.54 a share to the current price of just under $15 a share. The last time Worthington report earnings, it beat Wall Street estimates of 56 cents per share, reporting 70 cents per share. If we get another beat with this report and the company ups guidance, then this stock could easily see a huge short squeeze.The current short interest as a percentage of the float for Worthington is rather large at 10.8%. That means that out of the 55.9 million shares in the tradable float, 5.88 million are sold short by the bears. This is a reasonably low float and high short interest situation that can produce a sharp move higher if the bears scramble to cover some of their bearish bets. From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock formed a double top back in July at around $23.50 a share and since then has dropped to a recent low of $12.84 a share. Since hitting that low, the stock has rallied back up to just over $15 a share. >>Does Technical Analysis Really Work? If you're bullish on this name, I would wait until after they report and buy the stock once it breaks out above $15.50 a share on big volume. Look for volume that's tracking in close to or above its three-month average action of 1 million shares. I would add to any long positions once the stock then takes out its 50-day moving average of $16.98 a share and target a run back towards the 200-day moving average at $19.04 a share. I would get short this name only if the stock drops below $12.84 after earnings on big volume. I would add to any short bets if the stock then takes out some big support at $11.63 a share on heavy volume. I would target a drop back towards $10 or possibly even lower if the bears take control of this name post-earnings. Worthington is one of the 20 highest-yielding metals and mining stocks.
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