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5 Stocks Set to Soar off Strong Earnings

First Cash Financial Services

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Another potential earnings short-squeeze play is First Cash Financial Services (FCFS - Get Report), one of TheStreet Ratings' top-rated consumer finance stocks, which is set to report results on Wednesday before the market open. This company is an operator of retail-based pawn and consumer finance stores in the U.S. and Mexico. Wall Street analysts, on average, expect First Cash Financial Services to report revenue of $132.69 million on earnings of 55 cents per share.

This stock was beaten down hard after it hit its September high of $52.18, subsequently dropping to an October low of $34.52 a share. After hitting that low, the stock has rebounded sharply to trade at just around $43 a share. This recent sharp move in the stock now sets it up perfectly for a breakout trade post-earnings.

>>5 Stocks Poised for Breakouts

The current short interest as a percentage of the float for First Cash Financial Services is rather high at 9.9%. That means that out of the 28.02 million shares in the tradable float, 2.76 million are sold short by the bears. It's worth pointing out that the bears have been increasing their bets by 10.6%, or by about 265,000 shares. If those bears are caught leaning to heavy into the quarter, then we could easily see a sharp move higher.

From a technical standpoint, this stock is currently trading above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. The stock recently ran into some stiff overhead resistance at around $45.31 to $45 a share, which also sits right around its 50-day moving average of $44.98 a share.

If you're bullish on this name, I would wait until after they report and buy the stock once it breaks out above $45 to $45.31 on big volume. Look for volume on the breakout that's tracking in close to or above its three-month average action of 459,600 shares. If that breakout triggers, then look for the stock to make a run at its 52-week high of $52.18 a share.

I would get short this stock after its report only if it fails to breakout and then drops below $41 a share with volume. I would add to any short position once the stock drops below its 200-day moving average of $39.28 with volume. Target a drop back below $38 a share if the bears gain full control of this name post-earnings.

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BWLD $131.54 -0.02%
EGHT $11.36 0.00%
FCFS $48.70 0.00%
ISRG $631.61 0.02%
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