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TheStreet Open House

5 Stocks Set to Soar on Strong Earnings

Cracker Barrel Old Country Store

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One earnings short-squeeze play in restaurants complex is casual dining player Cracker Barrel Old Country Stores (CBRL), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Cracker Barrel Old Country Store to report revenue of $602.20 million on earnings of $1.05 per share.

This company crushed Wall Street estimates last quarter after they beat by 9 cents per share. Market players will be looking for another sizeable beat this quarter that could lead to big spike higher in the stock. Cracker Barrel's profits have jumped year-over-year by an average of 3.5% over the past five quarters. Revenue has also trended up for three consecutive quarters.

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The current short interest as a percentage of the float for Cracker Barrel, one of the highest-yielding leisure stocks, is 7.2%. That means that out of the 19.38 million shares in the tradable float, 1.61 million are sold short by the bears. This is a pretty decent short interest on a stock with a very low float. Any bullish earnings news and guidance could easily spark a solid short-squeeze.

From a technical standpoint, this stock is currently trading above its 50-day and 200-day moving averages, which is bullish. On Monday, while the market sold off hard, shares of CBRL jumped 1% as the stock moved back above its 200-day moving average of $45.66 on heavy volume.

If you're bullish on Cracker Barrel, wait until after its report and buy the stock if it breaks out above some past overhead resistance at $46.66 on high-volume. Look for volume that's tracking in close to or above its three-month average action of 369,030 shares. If we see that high-volume breakout post-earnings, then I expect this stock to re-test its July high near $49.60 a share, or possibly go much higher.

I would look to short this stock after earnings only if it fails to breakout and falls back below its 200-day at $45.66 on heavy volume. I would add to any short positions if the stock then moves back below its 50-day at $42 on strong volume. Target a fall back towards $41 to $39, or possibly even lower if market players are dumping this stock post-earnings.

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