One heavily shorted stock that could be ripe for a big earnings short squeeze is Peet's Coffee & Tea ( PEET), which is set to release numbers on Tuesday after the market close. This company is a specialty coffee roaster and marketer of fresh roasted whole bean coffee and tea. Wall Street analysts, on average, expect Peet's Coffee & Tea to report revenue of $88.70 million on earnings of 32 cents per share. My thesis for playing Peet's is to piggyback off the recent blowout quarter from Green Mountain Coffee Roasters ( GMCR), which led the stock to rocket higher due to its large short interest, jumping from under $90 a share to over $105 a share. If the coffee market is truly hot, then Peet's could be setting up for a similar move. The current short interest as a percentage of the float for Peet's is an extremely large 23.6%. That means that out of the 12.60 million shares in the tradable float, 2.98 million are sold short by the bears. This is an extremely low float with a high short interest, so a strong quarter out of Peet's that is anything close to Green Mountain's could send this stock soaring. From a technical standpoint, shares of Peet's recently put in a double-top chart pattern at around $62.86 to $62.53 a share. That said, the stock is still trading above both its 50-day and 200-day moving averages, which is bullish. The stock has also recently found some buying interest at around $57.50 a share. If you want to play Peet's for the long side, I would wait until it reports and would be a bigger buyer as long as the stock holds above $57.50 a share. If it holds that price zone, you could enter this name and then add to any long position once it takes out $62.86 on big volume. One could also wait until the report and just buy Peet's if it breaks out above $62.86 on heavy volume. I would short Peet's only if it breaks below $57.50 on big volume following its earnings report. I would add to any short trade if you see the stock trade through its 50-day moving average of $55.67 a share on strong volume. Peet's is on Jim Cramer's list of stocks to watch this week, though his recommendation is to avoid the stock.