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Another earnings short-squeeze candidate is homebuilder
Lennar(LEN - Get Report), which is set to release results on Wednesday before the market open. Wall Street analysts, on average, expect Lennar to report revenue of $913.95 million on earnings of 17 cents per share.
During their last quarter, Lennar met Wall Street expectations after reporting net income of 11 cents per share. In the previous second quarter, this company beat Wall Street estimates by 3 cents. Revenue has trended down during the past four quarters, and profit fell 31% in the last quarter to $20.7 million.
The current short interest as a percentage of the float for Lennar is extremely high at 21.9%. That means that out of the 159.79 million shares in the tradable float, 32.78 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 3.1%, or by about 983,000 shares.
From a technical standpoint, LEN is currently trading below both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong since it bottomed in October at $12.11 a share. During that uptrend, LEN has been consistently making higher lows and higher highs, which is bullish price action. This stock is now starting to challenge a big breakout level as we approach their earnings report.
If you're looking to get long LEN, I would buy some shares after its earnings report if the stock breaks out above $21.44 to $22 with high volume. Look for volume that's tracking in close to or above its three-month average action of 5,944,200 shares. If those levels are taken out with strong volume, then look for LEN to spike higher by 10% or more post-earnings.
I would avoid LEN or get short if after its earnings report the stock drops below its 50-day moving average of $18.46 with volume. A
high-volume move below the 50-day should set this tock up to re-test its 200-day moving average of $17.03 a share. I would then add to any short positions if the stock takes out $17.03 with volume. Look for a drop back toward $16.31 or possibly much lower if all of those levels are taken out with high-volume.
Lennar shows up on a list of
5 Homebuilder Stocks With Bright 2012 Outlooks.