This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Stocks Set to Soar on Bullish Earnings

Stocks in this article: MITK SCSS SNCR AFFX AKAM

Select Comfort

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

Get Adobe Flash player

Another potential earnings short-squeeze trade is bed manufacturer and retailer Select Comfort (SCSS), which is set to report results on Wednesday after the market close. Wall Street analysts, on average, expect Select Comfort to report revenues of $177.50 million on earnings of 22 cents per share.

Back on Dec. 20, I wrote about Select Comfort in " 5 Stocks Setting Up to Break Out," and since then, the stock has ripped higher from $21 to its recent 52-week high of $28.05 a share. That momentum could easily continue if Select Comfort can report a strong quarter and squeeze the shorts even more.

The current short interest as a percentage of the float for Select Comfort is rather high at 10.9%. That means that out of the 50.44 million shares in the tradable float, 5.55 million are sold short by the bears. This stock has a pretty low float and high short interest, so a decent quarter should spark a sizable short-squeeze. Whenever a stock has a low float and high short interest, any potential short-squeeze becomes amplified since the supply and demand issue for shares can be thrown off balanced rapidly.

From a technical perspective, SCSS is currently trading above its 50-day and 200-day moving averages, which is bullish. This stock has been in a monster uptrend for the last number of months, after shares found big buying support at around $17.78 to $18.58 a share. Since those buyers stepped in, SCSS went on to break out over $22.19 and continue its uptrend. Now the stock is within range of breaking out again to all-time highs if it can take out $28.05 post-earnings.

If you're bullish on SCSS, I would wait until after it reports its results and buy the stock once it breaks out above its 52-week high of $28.05 a share on strong volume. Look for volume that's tracking in close to or above its three-month average action of around 1 million shares. If we get that high-volume breakout, then I would look for a 10% to 15% move higher in SCSS post-earnings, since this stock is so heavily shorted.

I would simply avoid any long trades in SCSS or get short if this stock fails to take out its 52-week highs post-earnings, and then drops below some near-term support at $25 a share on big volume. If we get that action, then I would target a drop back towards $23 to $22.16 (50-day) a share, or possibly lower if the bears hammer this down post-earnings.

To see more potential earnings short squeeze plays, including OraSure Technologies (OSUR), ValueClick (VCLK) and Silicon Graphics (SGI), check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

RELATED LINKS:



Follow Stockpickr on Twitter and become a fan on Facebook.

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.
6 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs