Coinstar

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My first earnings short-squeeze play is automated retail solutions provider Coinstar ( CSTR), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Coinstar to report revenue of $580.19 million on earnings of 73 cents per share.

During the last quarter, Coinstar reported revenue of $537.6 million and GAAP sales were 15% higher than the prior-year quarter's $465.6 million Non-GAAP EPS came in at $1.26 per share and GAAP EPS was $1.14, which was 3.4% lower than the prior-year quarter's $1.18 per share.

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The current short interest as a percentage of the float for Coinstar is extremely high at 43.3%. That means that out of the 27.36 million shares in the tradable float, 12.9 million shares are sold short by the bears. This is a heavily shorted stock with a low tradable float. Any bullish earnings news could easily spark a monster short-squeeze for shares of CSTR post-earnings.

From a technical perspective, CSTR is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been trending sideways for the last two months, with shares moving between $46.83 on the downside and $54.16 on the upside. A high-volume move above the upper-end of that range post-earnings will trigger a breakout for shares of CSTR.

If you're bullish on CSTR, then I would wait until after its report and look for long-biased trades if this stock is trending above its 50-day at $49.86 and then if it breaks out above some near-term overhead resistance at its 200-day of $53.53 a share and above more resistance levels at $54.11 to $54.16 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 912,713 shares. If that breakout triggers, then CSTR will set up to re-fill some of its previous gap down zone from last July that started above $60 a share.

I would simply avoid CSTR or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $48.92 a share with heavy volume. If we get that move, then CSTR will set up to re-test or possibly take out its next major support levels at $46.83 to $45.19 a share. Any high-volume move below $45.19 will then put $43.07 to $41 into range for shares of CSTR.

I also featured Coinstar recently in " 3 Stocks Rising on Unusual Volume."

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