This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Heavily-Shorted Earnings Plays

Stocks in this article: GMCR BKS OVTI TIF SPLK

>>5 Dividend Stocks Itching to Pay You More

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Green Mountain Coffee

My first earnings short-squeeze trade idea is Green Mountain Coffee (GMCR), which is set to release numbers on Tuesday after the market close. This company is engaged in the specialty coffee and coffee maker businesses. Wall Street analysts, on average, expect Green Mountain Coffee to report revenue of $902.23 million on earnings of 48 cents per share.

The current short interest as a percentage of the float for Green Mountain Coffee is extremely high at 39.2%. That means that out of the 127.38 million shares in the tradable float, 49.71 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 1.8%, or by around 876,000 shares. If the bears are caught pressing their bets to hard into this quarter, then we could easily see a monster short-squeeze develop post-earnings.

From a technical perspective, GMCR is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been uptrending for the last two months, with shares moving higher from a low of $21.33 to its recent high of $30.40 a share. During that uptrend, shares of GMCR have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed GMCR within range of triggering a near-term breakout trade post-earnings.

If you're bullish on GMCR, then I would wait until after its report and look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $30.40 to $33.15 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5,739,480 shares. If that breakout triggers, then GMCR will set up to re-fill some of its massive gap down zone from back in May that started near $50 a share.

I would simply avoid GMCR or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some near-term support at $28 a share with heavy volume. If we get that action, then GMCR will set up to re-test or possibly take out its 50-day moving average of $25.09 a share. Any move below its 50-day will set up GMCR to re-test some previous support at $23.28 a share.

2 of 7

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs