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One earnings short-squeeze trade in the construction and agricultural machinery complex is
Lindsay(LNN - Get Report), which is set to release numbers on Thursday before the market open. Lindsay is a designer and manufacturer of self-propelled center pivot and lateral move irrigation systems used in the agricultural industry to increase or stabilize crop production while conserving water, energy and labor. Wall Street analysts, on average, expect the company to report revenue of $180.51 million on earnings of 61 cents per share.
Lindsay beat Wall Street estimates last quarter by a whopping 24 cents per share. Its profits have jumped year over year by an average of 96.1% over the past five quarters. Revenue has also been trending up for the past three straight quarters. Another huge beat and a guidance raise for this quarter should easily spark a massive short squeeze for shares of Lindsay.
The current short interest as a percentage of the float for Lindsay is a rather large 17%. That means that out of the 12.29 million shares in the tradable float, 2.09 million are sold short by the bears. This is a perfect storm for a potentially large short squeeze, since the short interest is so high and the tradable float is extremely low. That said, make sure the stock is showing strength after earnings before you jump in and look to profit off some notable short-covering.
From a technical standpoint, this stock is currently trading above its 50-day moving average and below its 200-day
moving average, which is neutral trendwise. This stock has been beaten-down huge since hitting its July high if $72.92 a share, with the stock printing a recent low of $46.03. That said, the stock has rebounded big from that low to its current price of just over $58 a share.
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If you want to play Lindsay for an earnings short-squeeze play, I would wait until after its report and buy once it trades above some past overhead resistance at around $59.50 a share with solid volume. Look for volume that's tracking in close to or above its three-month average action of 200,300 shares. I would then add to any long position once the stock takes out $62 a share, and target a run back toward the 200-day moving average of $65.04 or possibly higher if the bulls gain control of this stock post-earnings.
I would short this name after it has reported its results only if the stock drops below $55 a share on heavy volume. I would then add to any short position if the stock takes out $52.50 a share, and target a drop back toward the
52-week low of $46.03 if the bears whack this lower post-earnings.