Acuity Brands

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My first earnings short-squeeze trade idea is lightning solutions provider Acuity Brands ( AYI), which is set to release numbers on Tuesday before the market open. Wall Street analysts, on average, expect Acuity Brands to report revenue of $518.76 million on earnings of 88 cents per share.

This company has only beaten Wall Street estimates one time in the last four quarters. During the last quarter, Acuity Brands reported revenue of $486.7 million, and GAAP reported sales were 6.3% higher than the prior-year quarter's $457.7 million. Also last quarter, non-GAAP EPS was 62 cents per share and GAAP EPS was 57 cents per share, which was 24% higher than the prior-year quarter's 46 cents per share.

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The current short interest as a percentage of the float for Acuity Brands is notable at 7.8%. That means that out of the 41.66 million shares in the tradable float, 3.33 million shares are sold short by the bears. If the bulls get the earnings news they're looking for, then shares of AYI could easily spike sharply higher post-earnings.

From a technical perspective, AYI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $62.16 to its recent high of $79.16 a share. During that move, shares of AYI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AYI within range of triggering a near-term breakout trade post-earnings.

If you're bullish on AYI, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $78.67 to its 52-week high at $79.16 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 350,995 shares. If that breakout hits, then AYI will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $85 to $90 a share, or even $95 a share.

I would simply avoid AYI or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below its 50-day moving average at $74.89 a share with high volume. If we get that move, then AYI will set up to re-test or possibly take out its next major support levels at $70 to its 200-day moving average at $69.07 a share.

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