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Another potential earnings short-squeeze play is
Conn's(CONN - Get Report), which is set to release numbers on Tuesday before the market open. This company is a specialty retailer of durable consumer products, and it also provides consumer credit to support its customers' purchases of the products that it offer. Wall Street analysts, on average, expect Conn's to report revenue of $204.55 million on earnings of 35 cents per share.
On Aug. 7, Conn's reported that second quarter revenue at stores open at least a year jumped 22% boosted by a spike in demand for furniture and mattresses. The company said revenue at stores open at least a year for furniture and mattresses jumped 58%, helped by a better product selection and an increase in promotional activities.
The current short interest as a percentage of the float for Conn's is extremely high at 34.3%. That means that out of the 24.10 million shares in the tradable float, 5.67 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 16.1%, or by about 787,000 shares. If the bears are caught leaning too hard into this quarter, then we could easily see a monster short-squeeze develop post-earnings.
From a technical perspective, CONN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past three months, with shares soaring from a low of $14.40 to a recent high of $22.95 a share. During that sharp move the upside, shares of CONN have consistently made higher lows and higher highs, which is bullish technical price action. This stock has even started to trigger a near-term breakout today with shares moving above some near-term overhead resistance at $22.26 to $22.41 a share.
If you're bullish on CONN, then I would wait until after they report and look for long-biased trades if this stock can manage to break out to a new 52-week high above $22.95 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 360,062 shares. If we get that move, then look for CONN to possibly hit $30 a share post-earnings.
I would avoid CONN or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops below some near-term support at $21.04 to $20.76 a share with heavy volume. If we get that action, then CONN will setup to re-test and possibly take out its 50-day moving average of $17.96 a share.