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My first earnings short-squeeze trade idea today is high-end specialty retailer
Tiffany(TIF - Get Report), which is set to release its numbers on Thursday before the market open. This company, through its subsidiaries, engages in the design, manufacture, and retail of fine jewelry worldwide. Wall Street analysts, on average, expect Tiffany to report revenue of $816.85 million on earnings of 69 cents per share.
This company missed estimates last quarter after beating Wall Street estimates in the prior two quarters. During the fourth quarter of the last fiscal year, Tiffany reported net income of $1.39 per share against Wall Street estimates of a $1.42 per share. This company is looking to register its fifth-straight quarter of positive revenue increases. Revenue jumped 20.1% in the first quarter of the last fiscal year, 30.5% in the second quarter of the last fiscal year and 20.5% in the third quarter of the last fiscal year.
On Monday, Sterne Agee reiterated its buy rating on Tiffany with an $83 price target. Agee said: "Tiffany is on sale, although we note that comparisons remain challenging through Q3. Its valuation at 13.3x FY13 estimates is below its historic average on forward earnings of 18.3."
The current short interest as a percentage of the float for Tiffany is worth mentioning at 5.1%. That means that out of the 115.64 million shares in the tradable float, 6.38 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 8.6%, or by about 503,000 shares. If the bears are leaning too hard into this quarter, then shares of Tiffany could see a sizable short-squeeze if the report strong results.
From a technical perspective, TIF is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has sold off hard during the last two months, with shares dropping from a high of $74.20 to a recent low of $60.03 a share. That selloff has pushed TIF into oversold territory since its current relative strength index reading is now 33.69. Oversold can always get more oversold, but if TIF sees any strength post-earnings it could rebound sharply.
If you're bullish on TIF, I would wait until after its report and look for long-biased trades if this stock can take out some near-term overhead resistance at $62 to $63.28 a share with high-volume. Look for volume on that move that hits near or above its three-month average action of 2.1 million shares. If we get that action, look for TIF to re-test its $65 to its 50-day moving average of $67.29 a share if the bulls gain full control of this stock post-earnings.
I would simply avoid TIF or look for short-biased trades if after earnings this stock fails to trigger that move, and then drops back below some major near-term support levels at $60.03 to $58.36 a share with heavy volume. Target a move back towards some previous support at $55.70 to $53.44 a share or possibly lower if the bears spark a notable selloff post-earnings.
Tiffany shows up on a list of
12 Highest-Rated Consumer Stocks Picked by S&P.