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A potential earnings short-squeeze play in the computer services complex is
Vitamin Shoppe(VSI - Get Report), which is set to report results on Tuesday before the market open. This is a specialty retailer and direct marketer of vitamins, minerals, herbs, specialty supplements, sports nutrition and other health and wellness products. Wall Street analysts, on average, expect Vitamin Shoppe to report revenue of $239.71 million on earnings of 57 cents per share.
Wall Street analysts are looking for Vitamin Shoppe to report earnings that are up 19% and for sales to jump 11%. This company has beaten Wall Street estimates the last four quarters in a row and its coming off a quarter in which it topped forecasts by 6 cents, reporting a profit of 38 cents per share versus a mean estimate of net income of 32 cents per share. This company has averaged year-over-year revenue growth of 14.1% over the last four quarters.
The current short interest as a percentage of the float for Vitamin Shoppe is notable at 9.6%. That means that out of the 26.10 million shares in the tradable float, 2.53 million shares are sold short by the bears. This is a decent short interest on a stock with a very low float. If Vitamin Shoppe can produce bullish earnings results, then this stock could easily experience a sizeable short-squeeze post-earnings.
>>7 Hot Stocks on Traders' Radars From a technical perspective, VSI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently broke out above some past overhead resistance at $45.84 to $46.15 a share, and subsequently ran up to a recent high of $49.27 a share. After tagging that all-time high, VSI has pulled back toward its current price near $45 a share.
If you're a bull on VSI, I would wait until after its report and look for long-biased trades if this stock can manage to break out to an all-time high above $49.27 a share with high volume. Look for volume on that move that's near or well above its three-month
average volume of 316,894 shares. If we get that action, then look for VSI to tag $55 a share or higher if the bulls gain full control of this stock post-earnings.
I would simply avoid VSI or look for short-biased trades if after earnings that breakout never triggers, and then the stock drops back below its 50-day moving average of $44.56 a share on heavy volume. If we get that selloff, then look for VSI to trend down toward its 200-day moving average of $41.43 a share or possibly lower post-earnings.