Another potential earnings short-squeeze play is AutoZone (AZO), which is set to release numbers on Tuesday before the market open. This company is a retailer and distributor of automotive replacement parts and accessories. Wall Street analysts, on average, expect AutoZone to report revenue of $2.13 billion on earnings of $6.25 per share.
On last Friday, analysts at Credit Suisse upgraded shares of AutoZone from neutral to outperform and slapped a $440 price target on the stock. They noted that the move was a valuation call. AutZone currently trades at reasonable valuation, with a trailing price-to-earnings of 17.38 and a forward price-to-earnings of 13.79.The current short interest as a percentage of the float for AutoZone sits at 4.1%. That means that out of the 26.87 million shares in the tradable float, 1.54 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 12%, or by about 165,000 shares. From a technical perspective, AZO 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 last six months, with shares exploding higher from a low of $313.11 to a recent high of $399.10 a share. During that uptrend, this stock has consistently made higher lows and higher highs, which is bullish technical price action. That said, shares of AZO have recently moved back below its 50-day moving average of $381.68 a share on heavy volume. If you're in the bull camp on AZO, then I would wait until after they report and look for long-biased trades if this stock can manage to move back above its 50-day moving average of $381.68 a share with high volume. Look for volume on that move that registers close to or above its three-month average action of 419,224 shares. If we get that action, then I would add to any long positions in AZO if it takes out some near-term overhead resistance at $389.89 a share with volume and target a possible re-test of its 52-week high of $399.10 a share. I would avoid AZO or look for short-biased trades if the stock fails to recapture its 50-day moving average, and then drops below that major near-term support at $362.66 a share with high-volume. If we get that action, then look for AZO to re-test its 200-day moving average of $343.34 a share, or possibly drop towards some previous support at $330 a share. AutuZone, one of Lone Pine Capital's holdings, was also featured recently in "5 Cheap, Low-Risk Stocks to Buy."
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