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Another potential earnings short-squeeze trade idea is
PetSmart(PETM), which is set to report results on Tuesday after the market close. This company is a specialty provider of products, services and solutions for the lifetime needs of pets. Wall Street analysts, on average, expect PetSmart to report revenue of $1.60 billion on earnings of 73 cents per share.
Last quarter, PetSmart beat estimates by one cent, coming in at a profit of 91 cents a share versus the estimate of 90 cents per share. This marked the fourth straight quarter of beating Wall Street estimates. This company is hoping to register its fourth straight quarter of income increases when it reports this week. Net income jumped 26.4% in the second quarter or the last fiscal year and 23.1% in the third quarter of the last fiscal year.
The current short interest as a percentage of the float for PetSmart stands at 3.6%. That means that out of the 101.80 million shares in the tradable float, 3.88 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a sizeable short-squeeze if PetSmart can manage to beat earnings and raise forward guidance.
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From a technical perspective, PETM is currently trading below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the past six months, with shares soaring from a low of $45.16 to a recent high of $59.36 a share. This stock has recently slipped back below its 50-day moving average of $57.08 a share on
If you're bullish on PETM, I would wait until after it releases earnings and target long-biased trades if this stock can manage to move back above its 50-day moving average of $57.08 a share with high volume. Look for volume on that move that's close to or well above its three-month average volume of 980,090 shares. If we get that action, then I would look to add to any long positions if PETM can manage to print a new
52-week high above $59.36 a share with high-volume.
I would simply avoid PETM or look for short-biased trades if after earnings PETM fails to get back above its 50-day, and then drops below some near-term support at $54.07 to $53.17 a share with high-volume. If we get that action, then PETM could easily drop back towards its 200-day moving average of $50.17 a share if the bears hammer this stock down post-earnings.