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TheStreet Open House

5 Short-Squeeze Earnings Opportunities to Take

Stocks in this article: NAVFDSATUHEISAFM

If you're bullish on ATU, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $29.65 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 553,982 shares. If that breakout triggers, then ATU will set up to re-test or possibly take out its 52-week high of $31.33 a share. Some possible upside targets above that 52-week high are $33 to $35 a share.

I would avoid ATU or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below both its 50-day at $28.04 a share and its 200-day at $27.72 a share with high volume. If we get that move, then ATU will set up to re-test or possibly take out its next major support levels at $26.50 to $25.38 a share.

Heico

Another earnings short-squeeze play is Heico (HEI), which is set to release numbers on Tuesday after the market close. This company is engaged in the design, manufacture and sale of aerospace, defense and electronics related products and services throughout the United States and internationally. Wall Street analysts, on average, expect Heico to report revenue of $237.38 million on earnings of 43 cents per share.

The current short interest as a percentage of the float for Heico is rather high at 13.7%. That means that out of the 44.37 million shares in the tradable float, 2.19 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.5%, or by about 54,000 shares. Any bullish earnings news could spark a notable short-squeeze for shares of HEI post-earnings.

From a technical perspective, HEI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently gapped down from $43.86 a share to its recent low of $40.31 a share. Prior to that gap, shares of HEI had been uptrending, with the stock moving higher from $36.27 to $43.86 a share. Shares of HEI are now trading within range of triggering a near-term breakout trade above its gap down day high.

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