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An earnings short-squeeze play in the retail drugstore chain complex is
Rite Aid(RAD - Get Report), which is set to release numbers on Thursday before the market open. This company operates its drugstores in 31 states across the country and in the District of Columbia. Wall Street analysts, on average, expect Rite Aid to report revenue of $6.29 billion on a loss of 12 cents per share.
When Rite Aid reports for this quarter, the company is hoping it can register its third quarter in a row of beating Wall Street estimates. During the last quarter, it beat estimates after reporting a loss of 12 cents per share.
The current short interest as a percentage of the float for Rite Aid sits at 9.7%. That means that out of the 652.81 million shares in the tradable float, 59.56 million are sold short by the bears. This stock has a decent short interest for a name that trades under $5 a share.
From a technical standpoint, this stock is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock put in a near-term bottom at $0.85 back in October, and since then, it has uptrended strong making higher highs and higher lows.
If you're bullish on RAD, I would wait until after its report and buy some shares if the stock breaks out above some near-term
overhead resistance at $1.25 a share on heavy volume. Look for volume that's tracking in close to or above its three-month average action of 8,261,500 shares. If we get that action, then look for RAD to make a run at $1.50 a share or possibly much higher if the bulls gain full control of this stock post-earnings.
I would avoid this stock altogether if after its report shares drop back below both its 50-day of $1.13 and 200-day of $1.13 on heavy volume.
Rite Aid shows up on a November list of
11 Stocks Under $11 for a Rebound.