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My first earnings short-squeeze play is equipment rental player
United Rentals(URI - Get Report), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect United Rentals to report revenue of $1.11 billion on earnings of 48 cents per share.
Revenue for United Rentals in 2012 jumped 58% over the prior year to $4.1 billion, with fourth-quarter profit up 55% to $1.27 a share. The company expects 2013 revenue to hit $5 billion, and analysts see earnings rising 25% this year to $4.70 and 28% in 2014. KeyBanc Capital Markets analyst Joe Box recently said, "The rental trend will continue for at least another year."
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The current short interest as a percentage of the float for United Rentals is very high at 15%. That means that out of the 92.44 million shares in the tradable float, 13.84 million shares are sold short by the bears. If this company can deliver the earnings news the bulls are looking for, then we could easily see a monster short-squeeze post-earnings.
From a technical perspective, URI is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways for the last month and change, with shares moving between $57.24 on the upside and $48.47 on the downside. A high-volume move above the upper-end of its recent range could trigger a big breakout for URI post-earnings.
If you're bullish on URI, then I would wait until after its report and look for long-biased trades if this stock manages to take out its 50-day moving average of $53.32 a share and then once it breaks out above its 52-week high at $57.24 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 2 million shares. If that breakout hits, then URI will set up to enter new 52-week-high territory above, which is bullish technical price action. Some possible upside targets off that breakout are $65 to $70 a share.
I would simply avoid URI 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 levels at $48.47 to $46.83 a share with high volume. If we get that move, then URI will set up to re-test or possibly take out its next major support levels at $42 to its 200-day moving average at $41.89 a share.