My first earnings short-squeeze play is off-price branded apparel retailer Burlington Stores (BURL), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Burlington Stores to report revenue of $1.34 billion on earnings of $1.03 per share.
The current short interest as a percentage of the float for Burlington Stores is pretty high at 13.2%. That means that out of the 17.04 million shares in the tradable float, 2.24 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a large short-squeeze for shares for BURL post-earnings.
From a technical perspective, BURL is currently trending below its 50-day moving average, which is bearish. This stock has been trending sideways for the last month and change, with shares moving between $23.88 on the downside and $28.20 on the upside. Any high-volume move above the upper-end of that range post-earnings could trigger a big breakout trade for shares of BURL.
If you're bullish on BURL, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some key overhead resistance levels $26.94 to $28.20 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 359,205 shares. If that breakout triggers after earnings, then BURL will set up to re-test or possibly take out its next major overhead resistance level at its all-time high of $32.98 a share. Any high-volume move above that level will then give BURL a chance to tag $35 to $40 a share.
I would simply avoid BURL 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 levels at $25.45 to $24.87 a share and then below more support at $23.88 a share with high volume. If we get that move, then BURL will set up to re-test or possibly take out its 52-week low at $21.54 a share.