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My final earnings short-squeeze play today is data storage solutions provider
SanDisk(SNDK - Get Report), which is set to release numbers on Wednesday after the market close. Wall Street analysts, on average, expect SanDisk to report revenue of $1.30 billion on earnings of 77 cents per share.
During the last quarter, this company reported earnings of 56 cents per share. Over the last four quarters, SanDisk has reported decreasing revenue. In the fourth quarter of the last fiscal year, revenue dropped 2.2% to $1.54 billion. Before that, revenues dropped 10.1% year-over-year in the third quarter of the last fiscal year, and it dropped 24.9% in the second quarter of the last fiscal year.
Just recently, Stifel reiterated its buy rating on SNDK and changed its price target from $54 to $62 a share.
The current short interest as a percentage of the float for SanDisk sits at 3.4%. That means that out of the 241.22 million shares in the tradable float, 8.09 million shares are sold short by the bears. This isn't a giant short interest, but it's more than enough to send shares of SNDK sharply higher post-earnings if the company can deliver the earnings news the bulls are looking for.
From a technical perspective, SNDK 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 four months and change, with shares soaring higher from its low of $38.47 to its recent high of $58.92 a share. During that uptrend, shares of SNDK have been consistently making higher lows and higher highs, which is bullish technical price action.
If you're in the bull camp on SNDK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high of $58.92 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 3.92 million shares. If that breakout triggers, then SNDK could easily trend well north of $60 a share. Some possible upside targets are $70 or higher if SNDK gets into new 52-week-high territory with heavy volume.
I would simply avoid SNDK 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 $56.50 to $56 a share with high volume. If we get that move, then SNDK will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $52.80 a share to $50 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.