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My first earnings short-squeeze play is automated retail solutions provider
Coinstar(CSTR), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Coinstar to report revenue of $580.19 million on earnings of 73 cents per share.
During the last quarter, Coinstar reported revenue of $537.6 million and GAAP sales were 15% higher than the prior-year quarter's $465.6 million Non-GAAP EPS came in at $1.26 per share and GAAP EPS was $1.14, which was 3.4% lower than the prior-year quarter's $1.18 per share.
>>5 Bargain Stocks to Play the Resurgent U.S. Consumer
The current short interest as a percentage of the float for Coinstar is extremely high at 43.3%. That means that out of the 27.36 million shares in the tradable float, 12.9 million shares are sold short by the bears. This is a heavily shorted stock with a low tradable float. Any bullish earnings news could easily spark a monster short-squeeze for shares of CSTR post-earnings.
From a technical perspective, CSTR is currently trending 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 $46.83 on the downside and $54.16 on the upside. A high-volume move above the upper-end of that range post-earnings will trigger a breakout for shares of CSTR.
If you're bullish on CSTR, then I would wait until after its report and look for long-biased trades if this stock is trending above its 50-day at $49.86 and then if it breaks out above some near-term overhead resistance at its 200-day of $53.53 a share and above more resistance levels at $54.11 to $54.16 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 912,713 shares. If that breakout triggers, then CSTR will set up to re-fill some of its previous gap down zone from last July that started above $60 a share.
I would simply avoid CSTR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $48.92 a share with heavy volume. If we get that move, then CSTR will set up to re-test or possibly take out its next major support levels at $46.83 to $45.19 a share. Any high-volume move below $45.19 will then put $43.07 to $41 into range for shares of CSTR.
I also featured Coinstar recently in "
3 Stocks Rising on Unusual Volume."