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Another stock with the potential to see an earnings short-squeeze is
Winnebago Industries(WGO - Get Report), which is set to release results on Thursday before the market open. Winnebago is manufacturer of self-contained recreation vehicles used mainly in leisure travel and outdoor recreation activities. Wall Street analysts, on average, expect the company to report revenue of $116.84 million on earnings of 4 cents per share.
Winnebago failed to beat Wall Street estimates last quarter, and since then, the stock has taken a beating heading into this quarter. Shares of Winnebago were trading near $13 in May, but that's a long ways away from its current price of just over $7.20 a share. Some of the reason this stock has fallen so much is due to its declining income, which has dropped year over year by an average of 50.5% over the past five quarters. That said, if management was able to get things turned around for this quarter, then we could see a sharp pop off of depressed levels.
The current short interest as a percentage of the float for Winnebago is an extremely large 16.9%. That means that out of the 26.91 million shares in the tradable float, 4.89 million are sold short by the bears. This is a low float high short interest situation, so this is a name worth watching for a big earnings short squeeze this week.
From a technical standpoint, this stock is currently trading substantially below its 200-day moving average but right at its 50-day moving average, which is neutral trendwise. During the past two months, the stock has started to base and trade sideways between $8 on the upper end and $6 on the lower end. A near-term breakout of that sideways pattern should set this stock up for its next big trend.
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I would be a buyer of this stock after it reports earnings if we see a
breakout above $8.09 to $8.17 a share on
solid volume. I would then add to any long position once it takes out $9.50 a share with volume. Look for volume that's tracking in close to or above its three-month average volume of 325,400 shares. Target a run back towards its 200-day moving average of $11.23 a share if the bulls gain full control of this stock post-earnings.
I would short this stock after its report only if it drops below some key support at $6.15 to $6 a share on heavy volume. Target a drop back toward $5 or possibly even $4.25 a share if the bears decide to open up the selling floodgates post-earnings.
Winnebago is one of TheStreet Ratings'
top-rated automobile stocks.