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 Earnings Stocks Poised to Pop

Xyratex

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

Get Adobe Flash player

One potential earnings short-squeeze trade in the computer storage sector is Xyratex (XRTX), which is set to report results on Thursday after the market close. This company provides modular solutions for the enterprise data storage industry and hard disk drive capital equipment for the HDD industry. Street analysts, on average, expect Xyratex to report revenue of $316.51 million on earnings of 26 cents per share.

Stifel Nicolaus recently cut its rating on this stock to hold from buy, citing that the stock has a more balanced risk/reward after a 25% rally year-to-date, and an 80% move since early October. Despite that recent downgrade, this stock is trending very strong and trading just one point off its 52-week high of $17.52 a share.

The current short interest as a percentage of the float for Xyratex sits at 4.4%. That means that out of the 26.76 million shares in the tradable float, 1.19 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 11.3%, or by about 121,000 shares. This isn't a huge short interest, but it's more than enough to spark a decent short-covering rally if the company can report strong earnings and bullish guidance.

>>3 Tech Stocks With More Upside for 2012

From a technical perspective, XRTX is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has soared from its October low of $9.01 to a recent high of $17.52 a share. During that move, XRTX has consistently made higher lows and higher highs, which is bullish price action. Now the stock is trading within range of triggering a big breakout trade post-earnings.

If you're bullish on XRTX, I would wait until after its report and look for long biased trades if the stock breaks out above some overhead resistance at $17.52 to $17.68 a share with high-volume. Look for volume on a move over those levels that are near or well above its three-month average volume of 266,334 shares. If we get that action, then look for XRTX to tag $20 or higher if the bulls gain full control of this stock post-earnings.

I would simply avoid XRTX or look for short biased trades if after earnings that breakout never triggers and the stock drops back below its 50-day at $16.55 a share, and then below some near-term support at $15.95 with high-volume. If we get that move, then look for XRTX to drop pretty big sine the next nearest support level is near $14.50 to $13 a share.

4 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

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