5 Earnings Stocks Poised to Pop
This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short timeframe that your profits add up quickly.
That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.
Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move. That's why it can be worth betting prior to the report -- but only if you have a very strong conviction that the stock is going to rip higher, and its acting technically very bullish.
With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.
My first earnings short-squeeze play is regional banking player Bank of the Ozarks (OZRK) , which is set to release its numbers on Thursday after the market close. Wall Street analysts, on average, expect Bank of the Ozarks to report revenue of $60.22 million on earnings of 51 cents share.
If you're looking for a heavily shorted strong-trending banking name, then make sure to check out shares of Bank of the Ozarks ahead of its earnings report. This stock is trading just one point off if its 52-week high of $32.26 ahead of its quarter.
The current short interest as a percentage of the float for Bank of the Ozarks is rather high at 12.1%. That means that out of the 29.29 million shares in the tradable float, 3.54 million shares are sold short by the bears. The bears have also been increasing their short positions from the last reporting period by 3.2%, or by about 108,000 shares. This is a low float high short-interest situation, so any bullish earnings news could easily spark a large short-covering rally post-earnings.