Caribou Coffee

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Another potential earnings short-squeeze trade is coffeehouse operator Caribou Coffee ( CBOU), which is set to report results on Wednesday after the market close. Wall Street analysts, on average, expect Caribou Coffee to report revenue of $88.30 million on earnings of 13 cents per share.

If you're looking for a small-cap stock that's trending very strong heading into its quarterly earnings report, then make sure to take a strong look at shares of Caribou Coffee. This stock is trading within range of its 52-week high of $18.24 as we move close to their report.

The current short interest as a percentage of the float for Caribou Coffee is rather high at 12.4%. That means that out of the 18.10 million shares in the tradable float, 2.47 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 7%, or by about 466,700 shares.

From a technical perspective, CBOU is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently found some big buying support at around $12.23 to $12.76 a share. Since buyers stepped in at those levels, the stock took off and trended towards its current price of around $17.30 a share. Now CBOU is trading within range of a big breakout that could hit post-earnings if the company delivers strong results.

If you're bullish on CBOU, I would wait until after its report and look for long-biased trades if the stock breaks out above some near-term overhead resistance at $18.01 to $18.24 a share with high-volume. Look for volume that's tracking in close to or above its three-month average volume of 239,680 shares. If we get that action, then look for a sharp spike of 10% or more for CBOU post-earnings.

I would avoid CBOU or look for short biased trades after they report if the stock fails to break out and it moves back below some near-term support at $16.54 with high volume. I would target a drop back towards its 50-day moving average of $15.59 a share, or possibly much lower if the bears hammer this down stock post-earnings.

Caribou is also one of Scott Rothbort's Top 5 Beverage Stocks.

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