My first earnings short-squeeze play is off-price branded apparel retailer Burlington Stores (BURL - Get Report), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Burlington Stores to report revenue of $1.34 billion on earnings of $1.03 per share.
The current short interest as a percentage of the float for Burlington Stores is pretty high at 13.2%. That means that out of the 17.04 million shares in the tradable float, 2.24 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a large short-squeeze for shares for BURL post-earnings.
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From a technical perspective, BURL is currently trending below its 50-day moving average, which is bearish. This stock has been trending sideways for the last month and change, with shares moving between $23.88 on the downside and $28.20 on the upside. Any high-volume move above the upper-end of that range post-earnings could trigger a big breakout trade for shares of BURL.
If you're bullish on BURL, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels $26.94 to $28.20 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 359,205 shares. If that breakout triggers after earnings, then BURL will set up to re-test or possibly take out its next major overhead resistance level at its all-time high of $32.98 a share. Any high-volume move above that level will then give BURL a chance to tag $35 to $40 a share.
I would simply avoid BURL 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 $25.45 to $24.87 a share and then below more support at $23.88 a share with high volume. If we get that move, then BURL will set up to re-test or possibly take out its 52-week low at $21.54 a share.