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My first earnings short-squeeze play today is
Fastenal(FAST - Get Report), which is engaged in the wholesale distribution of industrial and construction supplies in North America, and is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Fastenal to report revenue of $804.90 million on earnings of 37 cents per share.
During the last quarter, Fastenal beat Wall Street estimates by 1 cent after reporting a profit of 38 cents per share, vs. an average estimate of 37 cents per share. This company reported in line results for the first quarter. Fastenal is looking to extend its streak of double-digit earnings growth to its fifth-straight quarter this period. The company has averaged year-over-year revenue growth of 19.2% over the last four quarters.
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The current short interest as a percentage of the float for Fastenal stands at 5.7%. That means that out of the 269.87 million shares in the tradable float, 15.35 million shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a decent short-squeeze if FAST can deliver the news the bulls are looking for.
From a technical perspective, FAST is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been trending sideways for the last two months, with shares moving between $41.50 on the downside and $45.30 on the upside. A move outside of that trading pattern post-earnings will likely setup the next major trend for FAST.
If you're bullish on FAST, then I would wait until after its report and look for long-biased trades once it manages to break out above some near-term overhead resistance levels at $45.28 to $45.33 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.8 million shares. If that breakout triggers, then look for FAST to re-test or possibly take out its next major overhead resistance levels at $47.75 to $54.61 a share.
I would simply avoid FAST or look for short-biased trades if after earnings it fails to trigger that breakout and then drops below some near-term support levels at $42 to $41.48 a share with heavy volume. If we get that move, then FAST will setup to re-test or possibly take out its next major support levels at $39 to $38 a share.