My first earnings short-squeeze trade idea is Intuitive Surgical (ISRG), which is set to report its numbers on Tuesday after the market close. This company designs, manufactures and markets daVinci Surgical Systems, which are advanced surgical systems. Wall Street analysts, on average, expect Intuitive Surgical to report revenue of $418.02 million on earnings of $2.76 per share.
When it comes to reporting strong earnings, this company is a serial offender. Intuitive Surgical has beaten Wall Street estimates for the last four quarters, and many think it will do it for a fifth time this week. Profits have been trending up year over year by an average of 36.2% over the past five quarters. Revenue has also been in an uptrend, with the company registering double-digit year-over-year percentage revenue growth for the past four quarters.The current short interest as a percentage of the float for Intuitive Surgical stands at 4.3%. That means that out of the 38.58 million shares in the tradable float, 1.64 million are sold short by the bears. This isn't a huge short interest, but since the float is so small, it's more than big enough to spark a solid short squeeze. From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong during the last couple of months, with shares making mostly higher lows and higher highs. The stock is now approaching a big breakout as we close in on their earnings report. If you're bullish on this stock, I would buy it after its report if it can break out above $395.42 to $402.35 a share on big volume. Look for volume that's tracking in close to or above its three-month average volume of 484,400 shares. If the stock can take out those levels, then I would add aggressively to any long position once it trades back above its 52-week high of $415.19 a share with volume. On the flipside, I would short this stock after earnings if it drops below some near-term support at $380 a share on heavy volume. I would add to any short position if the stock then takes out its 50-day moving average of $367.23 a share. Look to target a drop back towards $360 to $355 a share if the bears knock this down post-earnings. Intuitive Surgical, one of TheStreet Ratings' top-rated health care equipment stocks, shows up on a recent list of the 10 Best-Performing S&P 500 Stocks of 2011.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV