3 Stocks Reporting With History Of Earnings Upside See Short Increase

Everybody loves a winning streak, but they all have to end eventually. For companies reporting earnings a history of beating expectations implies the market is consistently undervaluing their strength. Investors must decide if such a history, and possibility of new disappointments, are worth trading on. [Related lists: 5 Heavily Shorted Stocks Reporting in The Next Two Weeks – Rebound Ready?]

With this in mind we compiled a list of stocks reporting this month that have a history of beating expectation. We then looked for stocks that are seeing bearish sentiment from short sellers who are increasing their positions on these historic winners. 

EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

If we assume this pessimism is related to earnings, are short sellers not repeating the mistakes of past earnings quarters? Or, are they calling it right by assuming they will not positively surprise us this time? 

As a recap, the 3 stocks listed below meet the following criteria: 

Reporting in the Second Half of March 

Strong History of Positive Earning Surprises – We found companies that posted earnings per share above the expected number for a minimum of four consecutive quarters. 

Increase in Shares Shorted Month-over-Month - Because short sellers benefit when share price falls they are signaling pessimism on their near-term performance.