An earnings short-squeeze play in the food processing complex is Zhongpin (HOGS), which is set to release numbers on Tuesday after the market close. This is a holding company, principally engaged in the meat and food processing and distribution business in the People's Republic of China. Wall Street analysts, on average, expect Zhongpin to report revenues of $410.30 million on earnings of 50 cents per share.
The current short interest as a percentage of the float for Zhongpin stands at 7.9%. That means that out of the 55.24 million shares in the tradable float, 14.87 million are sold short by the bears. This isn't a huge short interest, but it's more than enough to spike the stock off any bullish news.From a technical perspective, HOGS is currently trading below its 50-day moving average and right at its 200-day moving average, which is neutral trendwise. This stock recently ran higher from $8.30 to a recent high of $12.50 a share. After hitting that high, the stock has started to form a bearish pattern of lower highs and lower lows, as shares fell from to its current price of $10.11 a share. If you're bullish on HOGS, I would look for long-biased trades after its report if the stock can manage to move back above its 50-day moving average of $10.73 a share with high-volume. Look for volume that registers close to or above its three-month average action of 224,702 shares. If we get that action, I would target a run in HOGS back towards $11.86 to $12.50 a share in the near-term. I would simply avoid HOGS or look for short-biased trades after its report if the stock fails to move back above the 50-day and then takes out its 200-day at $9.91 a share with volume. Target a drop back toward $8.50 a share or possibly lower if HOGS breaks those key moving averages post-earnings with volume. To see more potential earnings short squeeze plays, including STR Holdings (STRI), Endocyte (ECYT) and Penson Worldwide (PNSN), check out the Earnings Short Squeeze Plays portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
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