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An earnings short-squeeze candidate in the iron and steel complex is
Worthington Industries(WOR - Get Report), which is set to release numbers on Thursday before the market open. This is a diversified metals processing company, focused on steel value-added steel processing and manufactured metal products. Wall Street analysts, on average, expect Worthington Industries to report revenue of $590.68 million on earnings of 35 cents per share.
If you're looking for a heavily shorted commodities-related stock that's within range of triggering a major near-term breakout post-earnings, then make sure to check out shares of Worthington Industries.
The current short interest as a percentage of the float for Worthington Industries is rather high at 8.3%. That means that out of the 51.35 million shares in the tradable float, 4.26 million are sold short by the bears. The bears have also been increasing the bets from the last reporting period by 7.7%, or by about 306,000 shares. If the bears are caught leaning too strong into this quarter, then shares of WOR could short-squeeze big.
From a technical perspective, WOR is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has put in a solid run since its October low of $12.92 a share, since shares are not changing hands at just under $18.50 as share. The stock recently found some buying support right off its 200-day moving average, and it's now within range of some major breakout levels ahead of its quarter.
If you're bullish on WOR, I would look for long-biased trades after it reports earnings if this stock manages to break out above some near-term overhead resistance at $18.82 to 19.33 a share with strong volume. Look for volume that hits near or above its three-month average volume of 521,677 shares. If we get that action, then keep in mind that WOR has little overhead resistance until $23 a share.
I would simply avoid WOR or look for short-biased trades if the stock fails to trigger that breakout, and then drops back below its 200-day moving average of $17.42 with high-volume. Target a drop down towards some near-term support at $16.39 or possibly to $14.50 if the bears hammer this lower post-earnings.
To see more potential earnings short squeeze plays, including
Research In Motion(RIMM) and
Resources Connection(RECN), check out the
Earnings Short Squeeze Plays portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.