My final earnings short-squeeze trade idea today is sportswear apparel player Under Armour (UA), which is set to release numbers on Tuesday before the market open. This company is engaged in the development, marketing and distribution of apparel, footwear and accessories for men, women and youth. Wall Street analysts, on average, expect Under Armour to report revenue of $358.50 million on earnings of 5 cents per share.
This company has beaten Wall Street estimates for the last four quarters in a row, and it's coming off a quarter where it topped estimates by 2 cents, reporting earnings per share of 14 cents per share against mean estimates of 12 cents per share. Under Armour has averaged year-over-year revenue growth of 35.2% over the last four quarters.The current short interest as a percentage of the float for Under Armour is notable at 8.1%. That means that out of the 77.72 million shares in the tradable float, 6.26 million are sold short by the bears. This is more than enough bears involved in the stock to spark a large short-squeeze if Under Armour can produce solid results and issue bullish forward guidance. From a technical perspective, UA is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock formed a double top back in June at around $53.58 to $53.93 a share. Since marking that top, the stock went on to drop below its 50-day moving average of $48.61 a share and hit a low of $44.07 a share. Since hitting that low, UA has rebounded back above its 50-day moving average of $48.61 a share. If you're bullish on UA, then I would wait until after they report and look for long-biased trades if it can manage to trigger a break out above some near-term overhead resistance at $50.92 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 2,126,890 shares. If we get that action, then UA will have a great chance of re-testing and possibly taking out its recent high of $53.93 a share post-earnings. I would simply avoid UA or look for short-biased trades if it fails to trigger that breakout, and then moves back below some near-term support at $47.33 a share with high volume If we get that move, then UA could easily re-test and possibly take out its 200-day moving average of $43.72 a share post-earnings. To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr. -- Written by Roberto Pedone in Winderemere, Fla.
Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV