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My first earnings short-squeeze trade candidate is coffee and tea player
Peet's Coffee & Tea(PEET), which is set to report its numbers on Tuesday after the market close. Wall Street analysts, on average, expect Peet's Coffee & Tea to report revenue of $103.18 million on earnings of 43 cents per share.
Keybanc Capital analyst Akshay Jagdale recently initiated coverage on this stock with a buy rating and slapped an $80 price target on the shares. This stock is trending very strong heading into their quarterly report since its trading just a few points off its
52-week high of $69.97. Shares of Peet's also recently broke out above $63.76 to $65 on heavy volume.
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The current short interest as a percentage of the float for Peet's Coffee & Tea is extremely high at 19.4%. That means that out of the 12.71 million shares in the tradable float, 2.47 million shares are sold short by the bears. The tradable float for Peet's is very small, and the short interest is large. If this company can deliver what the bulls' are looking for, then we could easily see a monster short squeeze post-earnings.
technical perspective, PEET is currently trading above both its 50-day and 200-day
moving averages, which is bullish. This stock formed a double bottom in January at $56.89 to $57.06 a share, and since then ran up to its current price of just under $68 a share. This stock is now within range of breaking out to new highs if the company can deliver a bullish earnings report.
If you're bullish on PEET, I would look for long-biased trades following its report if the stock takes out $69.97 a share with high volume. Look for volume that's tracking in close to or above its three-month average of 117,361 shares. If that level gets taken out with volume, I would look for a large spike higher of 10% or more since the bulls will be in full control of the stock.
I would only look for short biased trades or avoid PEET if after earnings the stock fails to break out and then drops back below some near-term support at $67.24 a share with volume. I would target a drop back near the 50-day moving average of $61.20 a share if the bears hammer this lower post-earnings.