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TheStreet Open House

5 Stocks Set to Soar off Bullish Earnings

Jabil Circuit

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My first earnings short-squeeze trade idea is electronic instrument and controls player Jabil Circuit (JBL), which is set to report its numbers on Tuesday after the market close. This company is a provider of worldwide electronic manufacturing services and solutions. Wall Street analysts, on average, expect Jabil Circuit to report revenue of $4.09 billion on earnings of 58 cents per share.

Wall Street expects Jabil Circuit to report a 7% jump in profits and a 4% rise in fiscal second quarters sales, when it reports on Tuesday. The company has seen its profit trend higher for three straight quarters. Last week, RBC Capital said it conducted channel checks, and it believes that demand for Jabil's products last quarter will likely exceed the company's guidance. The firm raised its price target on the stock from $22 to $30.

The current short interest as a percentage of the float for Jabil Circuit is notable at 4.8%. That means that out of the 187.64 million shares in the tradable float, 8.88 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.9%, or by about 944,000 shares.

>>3 Tech Stocks With More Upside for 2012

From a technical perspective, JBL is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past couple months, rising from a recent low of $18.12 to its current price of just over $27 a share. This stock just triggered a breakout trade once it moved above some near-term overhead resistance at $26.50 a share.

If you're bullish on JBL, I would look for long-biased trades following its earnings if the stock remains above that breakout level of $26.50 a share. If we get that action, then look for JBL to make a run at $30 a share or much higher if the bulls gain full control of this stock post-earnings.

I would avoid JBL or look for short-biased trades if after its earnings report the stock fails to hold above $26.50, and then takes out that level with high-volume. If we get that action, I would target a drop back towards its 50-day moving average of $24.33 a share or possibly lower if the bears hammer this stock lower post-earnings.

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