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5 Stocks Set to Soar off Strong Earnings

Stocks in this article: ISRG FCFS LUFK BWLD EGHT

8x8

My final earnings short-squeeze candidate for today is 8x8 (EGHT), which is set to release numbers on Wednesday after the market close. This company develops and markets telecommunications services for Internet protocol, telephony and video applications, as well as Web-based conferencing and unified communications services, managed hosting and cloud-based computing services. Wall Street analysts, on average, expect 8x8 to report revenue of $18.94 million on earnings of 3 cents per share.

Net income for 8x8 is set to double as the company looks to report earnings of 3 cents a share for the fifth consecutive quarter in a row. The stock is trading very strong ahead of the quarter with shares just about one point off its 52-week high of 5.44 a share.

The current short interest as a percentage of the float for 8x8 stands at 11.4%. That means that out of the 50.52 million shares in the tradable float, 6.77 million are sold short by the bears. This is a low priced stock with a low float and high short interest. If we get a strong quarter that Wall Street likes, then look for shares of EGHT to soar following their report.

From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. For the past couple of months, the stock has been making mostly higher lows and higher highs as it has run from $3 to a recent high of $4.95 a share. The stock is now trading just above its 50-day moving average of $4.11 a share.

If you're bullish on this stock, I would wait until after its report and buy some shares if it breaks out above $4.70 to $4.95 a share on heavy volume. Look for volume that's tracking in close to or above its three-month average action of 1.25 million shares. I would then add aggressively to any long position if the stock takes out its 52-week high of $5.44 with volume. Shares of 8x8 haven't traded above $5.44 since 2004, so look to get long thing stock if it takes that level out with volume.

To see more potential earnings short squeeze candidates, including Harley-Davidson (HOG), Knight Capital Group (KCG) and Pinnacle Financial Partners (PNFP), check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
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