BALTIMORE (Stockpickr) -- Earnings season gets a lot of attention -- and for good reason: When it comes to Wall Street, information can move stocks. And because publicly traded companies are only required to release their financial data to investors quarterly, each earnings release gives shareholders a significant amount of information on a company's business operations and forward-looking prospects. As a result, earnings season is one time that can have a major impact on a company's share price.But what happens when a company that's heavily shorted sees an earnings-season jump? In that case, earnings can become a major catalyst for a short squeeze. A short squeeze is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing short-sellers to cover their positions -- and share price to skyrocket. One of the best indicators of just how high a short-squeezed stock could go is the short interest ratio, which divides shares short by average daily trading volume in order to get a ballpark estimate of the number of days it would take for short-sellers to cover their positions. The higher the short ratio, the higher the potential profits when the shorts get squeezed. Here's a look at a handful of pre-earnings plays that have the potential to see a short squeeze on good quarterly numbers. CMS Energy ( CMS - Get Report) is a regulated utility holding company that provides natural gas and electricity to around 6.5 million consumers in Michigan, as well as a wholesale power generation throughout the U.S. Despite strong market outperformance year-to-date and a generous dividend, the short-sellers remain bearish about this stock. At present, CMS sports a short ratio of 14.2. So why would a recession-resistant regulated utility with a steady dividend be on short-sellers' radar? For CMS Energy, the key word is debt. At present, CMS carries a relatively high debt load for its size, and it currently deals with a relatively low coverage ratio. For a utility, which is supposed to provide income investors with steady dividend checks, that's a disconcerting prospect -- after all, debt is the biggest challenger to dividend payouts.
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