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5 Hated Stocks Set to Soar on Earnings


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My final earnings short-squeeze trade idea is specialty retailer of nutritional supplements GNC (GNC - Get Report), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect GNC to report revenue of $574.72 million on earnings of 46 cents per share.

During the last quarter, this company reported revenue of $621.6 million and GAAP reported sales were 16% higher than the prior-year quarter's $538 million. Last quarter, non-GAAP EPS was 61 cents per share and GAAP EPS was 60 cents per share, which was 33% higher than the prior-year quarter's 45 cents per share.

The current short interest as a percentage of the float for GNC sits at 8.9%. That means that out of the 98.83 million shares in the tradable float, 9.1 million shares are sold short by the bears. This isn't a huge short interest, but its more than enough to send shares of GNC soaring higher post-earnings if the company can deliver the numbers the bulls are looking for.

From a technical perspective, GNC is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently spiked back above its 50-day moving average with strong upside volume flows. That move has started to push shares of GNC within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on GNC, 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 levels at $36.95 to $37.26 a share and then once it takes out more resistance at $37.96 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 1.8 million shares. If that breakout triggers, then GNC will set up to re-test or possibly take out its next major overhead resistance levels at $41.22 to $42.70 a share. Any high-volume move above $42.70 a share would then push GNC into new 52-week high territory, which is bullish price action.

I would simply avoid GNC or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average of $34.66 a share with high volume. If we get that move, then GNC will set up to re-test or possibly take out its next major support levels at $32.94 to $30.92 a share.

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.


Follow Stockpickr on Twitter and become a fan on Facebook.

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 technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including and . You can follow Pedone on Twitter at or @zerosum24.
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Z $17.81 -0.89%
GNC $26.19 -2.93%
LGND $85.97 0.21%
TRIP $59.90 -1.92%
STMP $85.60 1.47%


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