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TheStreet Open House

5 Hated Earnings Stocks You Should Love

Usana Health Sciences

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My first earnings short-squeeze play is nutritional and personal care products maker Usana Health Sciences ( USNA), which is set to release numbers on Tuesday after the market close. Wall Street analysts, on average, expect USANA Health Sciences to report revenue of $172.40 million on earnings of $1.14 per share.

The current short interest as a percentage of the float USANA Health Sciences is extremely high at 29%. That means that out of the 6.67 million shares in the tradable float, 1.95 million shares are sold short by the bears. This is a stock with a huge short interest and a very low tradable float. Any bullish earnings news could easily spark a monster short squeeze for shares of USNA post-earnings.

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From a technical perspective, USNA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $78.94 to its intraday high of $88.73 a share. During that uptrend, shares of USNA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of USNA within range of triggering a big breakout trade post-earnings.

If you're bullish on USNA, 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 at $89.72 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 128,383 shares. If that breakout triggers, then USNA will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $105 to $115 a share.

I would simply avoid USNA 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 $85 a share to its 50-day moving average at $82.64 a share with high volume. If we get that move, then USNA will set up to re-test or possibly take out its next major support levels at $78.94 to $76 a share, or even $73 a share.

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