Actuant

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My final earnings short-squeeze play today is fabricated products player Actuant ( ATU), which is set to release numbers on Wednesday before the market open. This company designs, manufactures and distributes a range of industrial products and systems. Wall Street analysts, on average, expect Actuant to report revenue of $429.21 million on earnings of 59 cents per share.

This company has beaten Wall Street estimates for the last four quarters and its coming off a quarter where it crushed estimates by 6 cents, after reporting a net income of 43 cents per share vs. estimates of 37 cents per share. During the second quarter, profit jumped more than fourfold to $32.2 million from $7.9 million the year earlier. Revenue soared 14.3% to $378 million from $330.7 million. Actuant has averaged year-over-year revenue growth of 33.3% over the last four quarters.

The current short interest as a percentage of the float for Actuant is rather high at 9.7%. That means that out of the 62.68 million shares in the tradable float, 6.05 million are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 6.8%, or by about 383,000 shares. If the bears are caught learning too hard into this quarter, then we could easily see a monster short-squeeze develop.

From a technical perspective, ATU is currently trading above its 200-day moving average and right below its 50-day moving average, which is neutral trendwise. Prior to the end of May, this stock was downtrending hard, with shares dropping from a high of $29.97 to a recent low of $24.23 a share. During that move lower, shares of ATU have mostly made lower highs and lower lows, which is bearish technical price action. That said, during the last month and change this stock has found buying interest at $24.33 to $23.23 a share, and its rebounded towards its current price of $26 a share.

If you're in the bull camp on ATU, then I would wait until after they report and look for long-biased trades if it can manage to trigger a near-term breakout above some overhead resistance at $26.69 with high volume. Look for volume on that move that's near or above its three-month average action of 698,527 shares. If we get that move, then look for ATU to hit $28 to $30 a share or possibly higher if the bulls spark a sizeable short-squeeze post-earnings.

I would simply avoid ATU or look for short-biased trades if it fails to trigger that breakout, and then moves below some near-term support at $25.50 to $24.23 a share with heavy volume. If we get that move, then I would look for ATU to trade down towards its next significant support levels at $22 to $20 a share if the bears hammer this stock down post-earnings.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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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.

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