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My first earnings short-squeeze play is home beverage carbonation systems maker
SodaStream(SODA - Get Report), which is set to release numbers on Wednesday before the market open. Wall Street analysts, on average, expect SodaStream to report revenue of $121.54 million on earnings of 39 cents per share.
During the last quarter, SodaStream reported revenue of $112.8 million and GAAP sales were 43% higher than the prior-year quarter's $78.4 million. Non-GAAP earnings per share were 87 cents per share, and GAAP EPS of 80 cents per share were 60% higher than the prior-year quarter's 50 cents per share.
The current short interest as a percentage of the float for SodaStream is extremely high at 44.7%. That means that out of the 17.34 million shares in the tradable float, 8.17 million shares are sold short by the bears. This stock sports a high short interest and has a very low tradable float, which can be a lethal combination for a short-squeeze play. If the bulls get the earnings news they're looking for, then SODA could easily see a monster short-squeeze develop post-earnings.
From a technical perspective, SODA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares soaring higher from is low of $33.15 to its recent high of $53.99 a share. During that uptrend, shares of SODA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SODA within range of triggering a major breakout trade post-earnings.
If you're bullish on SODA, 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 $52.67 to $53.99 a share with high volume. Look for volume on that move that registers near or above its three-month average volume of 1.13 million shares. If that breakout triggers, then SODA could easily trend well north of $60 a share post-earnings.
I would simply avoid SODA 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 $48.87 to its 50-day at $46.91 a share with high volume. If we get that move, then SODA will set up to re-test or possibly take out its next major support levels at $46.16 to $45.36 a share. Any high-volume move below those levels will then put its 200-day at $39.47 into range for shares of SODA.