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TheStreet Open House

5 Stocks Set to Soar on Bullish Earnings

Crocs

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My final earnings short-squeeze play today is footwear and accessories designer Crocs (CROX), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect Crocs to report revenue of $302.37 million on earnings of 43 cents per share.

This company has beaten Wall Street estimates the last four quarters and it is coming off a quarter where it smashed estimates by 5 cents per share, after reporting net income of 68 cents per share against a mean estimate of 63 cents per share. This company has averaged year-over-year revenue growth of 18.3% over the last four quarters. Crocs has also reported three consecutive quarters of income increases.

The current short interest as a percentage of the float for Crocs is notable at 6.1%. That means that out of the 89.19 million shares in the tradable float, 5.44 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 the bulls get the news they're looking for.

From a technical perspective, CROX is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock ran into some tough resistance in September at around $18.60 a share, and since then it has downtrended to a low of $15.60 a share. During that downtrend, shares of CROX have been mostly making lower highs and lower lows, which is bearish technical price action. That said, the stock has stabilized around $15.60 and is now moving within range of triggering a near-term breakout trade.

If you're in the bull camp on CROX, then I would wait until after its earnings report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $16.92 to $18.60 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1.7 million shares. If we get that move, then CROX will setup to re-test or possibly take out its next major overhead resistance levels at $20 to $22.59 a share post-earnings.

I would simply avoid CROX or look for short-biased trades if after earnings it fails to trigger that breakout, and then moves back below some near-term support at $15.60 a share with high volume. If we get that move, then CROX will setup to re-test or possibly take out its next major support levels at $13.84 to $13.80 a share post-earnings. Any move below $13.80 will push CROX into new 52-week low territory, which is bearish technical price action.

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.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

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