Buffalo Wild Wings

One earnings short-squeeze play in the restaurant sector is Buffalo Wild Wings ( BWLD), which is set to release numbers on Wednesday after the market close. This company engages in the ownership, operation, and franchise of restaurants in the U.S. Wall Street analysts, on average, expect Buffalo Wild Wings to report revenue of $190.31 million on earnings of 59 cents per share.

This company missed estimates last quarter by 2 cents and beat Wall Street estimates by 8 cents in the first quarter. Profits have jumped year-over-year by an average of 25.7% over the past five quarters. Heading into the quarter, the stock is trading about 10 points off of its 52-week high of $69.52 a share.

The current short interest as a percentage of the float for Buffalo Wild Wings is rather high at 12.7%. That means that out of the 18.03 million shares in the tradable float, 2.3 million are sold short by the bears. This stock has an extremely low float and a very high short interest. Any bullish earnings news could spark a massive short-squeeze this week.

From a technical standpoint, this stock is currently trading below its 50-day moving average and just above its 200-day moving average, which is neutral trendwise. Back in July, the stock formed a double top at around $69.24 to $69.52 a share. Since forming that topping pattern, the stock plunged to an August low of $52.37 a share. Shares have since rallied back to its current price of just over $58 a share.

The way I would play this name is to wait until after it report its results and buy this stock if it trades back above its 50-day moving average of $60.07 a share and above some big overhead resistance at $60.35 a share with volume. Look for volume that's tracking in close to or above its three-month average volume of 399,700 shares. If those levels are taking out after earnings, with volume, then look for this stock to make a run at $65.50 a share or possibly even higher.

I would short this name after its report only if the stock drops below $57 a share on big volume. I would add to any short position once the stock then takes out $54.28 a share, and target a drop back towards $52 or possibly even lower if the bears hammer this lower post-earnings.

Buffalo Wild Wings, one of TheStreet Ratings' top-rated restaurant and hotel stocks, shows up in the portfolio of Wilbur Ross' Invesco Private Capital as of the most recently reported period.

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