This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Stocks Set to Soar off Strong Earnings

Lufkin Industries

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

One earnings short-squeeze play in the oil well services and equipment complex is Lufkin Industries (LUFK), which is set to release numbers on Wednesday before the market open. On average, Wall Street analysts expect Lufkin Industries, a global supplier of oil field and power transmission products, to report revenue of $242.52 million on earnings of 60 cents per share.

This company has missed estimates for the last three consecutive quarters, but profits have risen year over year by an average of more than twofold for the past five quarters. This company recently cut its forecast for the third quarter, blaming materials shortages, shipment delays and other issues. The question now is whether these issues are priced into the stock and whether the company can say anything positive that could spike it post-earnings.

>>5 Rocket Stocks for Earnings Season

The current short interest as a percentage of the float for Lufkin Industries is a notable 7.3%. That means that out of the 29.64 million shares in the tradable float, 2.17 million are sold short by the bears. This is another low float high short interest situation, so this is one name I am expecting a lot of volatility in post-earnings.

From a technical standpoint, this stock is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a nasty downtrend for the past five months, with shares regularly making lower highs and lower lows. That said, when the company recently cut its guidance, the stock sold off sharply on big volume. Since that selloff, the stock has rebounded from $42.10 to its current price of just over $50 a share.

The way I would play this stock is to wait until after they report and buy the stock if it breaks out above $52.32 a share with big volume. Look for volume that's tracking in close to or above its three-month average action of 618,800 shares. I would target a run back towards its 50-day moving average of $59.63 if the bulls can spark a short covering rally post-earnings.

I would get short this stock after it reports earnings only if it drops below $48 to $47.50 a share on heavy volume. Those levels are big previous support zones, so if the stock breaks below them, look for a sharp selloff. I would target a drop back towards $42.10 or possibly even lower if the bears whack this name lower post-earnings.
4 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
BWLD $196.18 -0.52%
EGHT $8.80 -1.30%
FCFS $43.71 1.30%
ISRG $469.40 0.21%
AAPL $112.06 2.30%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs