United Natural Foods
Another potential earnings short-squeeze trade is United Natural Foods (UNFI - Get Report), which is set to release numbers on Tuesday before the market open. This company is a distributor of natural, organic and specialty foods and non-food products in the U.S. and Canada. Wall Street analysts, on average, expect United Natural Foods to report revenue of $1.32 billion on earnings of 51 cents per share.
This stock has been on fire so far in 2012, with shares up over 50%. As I write this, shares of United Natural Foods are entering new 52-week-high territory, which is bullish technical price action.
The current short interest as a percentage of the float for United Natural Foods stands at 4.7%. That means that out of the 46.52 million shares in the tradable float, 2.17 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a solid short-covering rally if it can deliver the earnings news the bulls are looking for.From a technical perspective, UNFI is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending extremely strong for the past six months, with shares soaring from a low of $44.67 to its current price of around $60.44 a share. During that uptrend, shares of UNFI have consistently been making higher lows and higher highs, which is bullish technical price action. If you're in the bull camp on UNFI, then I would wait until after earnings and look for long-biased trades if the stock manages to print a new 52-week high with heavy volume. Look for volume on that move that hits near or above its three-month average action of 285,647 shares. If we get that action, then UNFI has a great chance of heading north of $70 a share post-earnings. I would simply avoid UNFI or look for short-biased trades if after earnings the stock fails to hit a new 52-week high and then moves back below some near-term support at $57 a share with high volume. If we get that move, then look for UNFI to re-test or possibly take out its 50-day moving average of $55.01 a share. If UNFI takes out its 50-day, then this stock could trade back towards its next significant support levels at $53 to $50 a share post-earnings.