Molex

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

My final earnings short-squeeze trade for today is electronics and controls player Molex ( MOLX), which is set to release numbers on Wednesday before the market close. This company manufactures and sells electronic components, including switches and fiber optic products and systems. Wall Street analysts, on average, expect Molex to report revenue of $890.19 on earnings of 41 cents per share.

Wall Street is looking for a lighter quarter out of Molex, since the company reported a profit of 45 cents a year ago, and the consensus estimate is for earnings per share of 41 cents for this quarter. Molex has seen its net income trend higher for three straight quarters. During the first quarter, net income jumped 7.2% and it soared 70.2% in the fourth quarter of the last fiscal year.

The current short interest as a percentage of the float for Molex stands at 8.5%. That means that out of the 136.42 million shares in the tradable float, 5.44 million shares are sold short by the bears. This is a decent short interest, so a bullish quarter out of Molex should spark a sizable short-squeeze.

From a technical standpoint, MOLX is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently triggered a big breakout trade once it cleared some overhead resistance at $25.93 on decent volume. Now this stock is trading within range of yet another big breakout if it can manage to take out an overhead resistance area from earlier 2011 where the stock doubled topped.

If you're bullish on MOLX, I would wait until after it releases earnings and buy the stock if it breaks out above $27.61 to $27.82 with high-volume. Look for volume that's tracking in close to or above its three-month average volume of 879,347 shares. If we get that action, I would look for MOLX to spike higher by 10% or more post-earnings.

I would get short or avoid MOLX from the long side if after their report this stock fails to break out and drops back below some near-term support zones at $26 to $25 a share on high-volume. Target a drop back towards its 50-day moving average of $24.21 or its 200-day moving average of $23.65 if the bears hammer this lower post-earnings.

To see more potential earnings short squeeze plays, including Fusion-IO (FIO), RPC (RES) and First Cash Financial Services (FCFS), check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

RELATED LINKS:



Follow Stockpickr on Twitter and become a fan on Facebook.
At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.

If you liked this article you might like

Jim Cramer: Investors Always Need to Be Ready in This Stock Market

Stocks Hold Ground Against Crude Oil's Fresh Five-Year Lows

RF Micro Devices (RFMD) Weak On High Volume

Stocks Shake Off Greek Political Drama to Grind to New Records

Stock Futures Slip as Political Turmoil in Greece Weighs on Markets