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Of the nearly 500 stocks that have a strong and consistent history of positive earning surprises - beating market expectations - more than 150 will be reporting this week. Investors who like to follow and trade on earnings season should be ready for action.

We decided to take a closer look at these stocks that boast a history of surprising the market with positive earnings reports, with an average earnings surprise of at least 5% over the last five quarterly reports. Will they continue to surprise next week?

To find likely candidates for a winning streak we looked for bullish signals from institutional investors and short sellers.

Specifically, we screened for net institutional purchases in the current quarter that represent at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

We then looked for a decrease in shares shorted month over month that represents more than 1% of share float. One percent increases are not usually viewed as a significant signal, but so close to their earning date we feel there may be more implication in this change than during other periods.

The List

Four stocks made our final list. Do you think these hedge fund favorites will continue reporting positive surprises next week?

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

1. Fusion-io, Inc. (FIO): Focuses on the development, marketing, and sale of storage memory platforms for data decentralization.

  • Market cap at $1.44B, most recent closing price at $14.93. Expected earnings date April 24.
  • In Mar 2012: Reported EPS at 0.06 vs. estimate at 0.02 (surprise of 200%). In Jun 2012: Reported EPS at 0.09 vs. estimate at 0.04 (surprise of 125%). In Sep 2012: Reported EPS at 0.14 vs. estimate at 0.07 (surprise of 100%). In Dec 2012: Reported 0.13 vs. estimate at 0.08 (surprise of 62.5%. [Average earnings surprise at 121.88%].
  • Net institutional purchases in the current quarter at 6.0M shares, which represents about 6.97% of the company's float of 86.11M shares. Top holders are FMR LLC (14.87%), NEA Management Company, LLC (7.29%), and BlackRock Advisors, LLC (6.19%).
  • Shares shorted have decreased from 29.76M to 28.80M over the last month, a decrease which represents about 1.11% of the company's float of 86.11M shares. Days to cover ratio at 10.82 days.

2. Freescale Semiconductor Holdings I, Ltd. (FSL): Engages in processing semiconductors and solutions for automotive, networking, industrial, and consumer markets worldwide.

  • Market cap at $3.3B, most recent closing price at $13.09. Expected earnings date April 24.
  • In Mar 2012: Reported EPS at -0.04 vs. estimate at -0.06 (surprise of 33.3%). In Jun 2012: Reported EPS at 0.07 vs. estimate at 0.02 (surprise of 250%). In Sep 2012: Reported EPS at 0.04 vs. estimate at -0.06 (surprise of 166.7%). In Dec 2012: Reported -0.15 vs. estimate at -0.18 (surprise of 16.7%. (Average earnings surprise at 116.68%).
  • Net institutional purchases in the current quarter at 4.5M shares, which represents about 8.33% of the company's float of 54.05M shares. Top holders are Blackstone Group L.P. (81.79%), FMR LLC (9.98%), and JPMorgan Chase & Company (4.55%).
  • Shares shorted have decreased from 20.62M to 18.66M over the last month, a decrease which represents about 3.63% of the company's float of 54.05M shares. Days to cover ratio at 10.97 days.

3. Netflix, Inc. (NFLX): Provides subscription based Internet services for TV shows and movies in the United States and internationally.

  • Market cap at $9.17B, most recent closing price at $163.82. Expected earnings date April 22.
  • In Mar 2012: Reported EPS at -0.08 vs. estimate at -0.27 (surprise of 70.4%). In Jun 2012: Reported EPS at 0.11 vs. estimate at 0.05 (surprise of 120%). In Sep 2012: Reported EPS at 0.13 vs. estimate at 0.04 (surprise of 225%). In Dec 2012: Reported 0.13 vs. estimate at -0.13 (surprise of 200%. (Average earnings surprise at 153.85%).
  • Net institutional purchases in the current quarter at 4.1M shares, which represents about 8.34% of the company's float of 49.18M shares. Top holders are Capital Research Global Investors (11.94%), Carl Icahn (9.9%), and T. Rowe Price Associates (4.22%).
  • Shares shorted have decreased from 8.47M to 7.49M over the last month, a decrease which represents about 1.99% of the company's float of 49.18M shares. Days to cover ratio at 1.32 days.

4. USANA Health Sciences Inc. (USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide.

  • Market cap at $653.53M, most recent closing price at $48.41. Expected earnings date April 23.
  • In Mar 2012: Reported EPS at 0.9 vs. estimate at 0.69 (surprise of 30.4%). In Jun 2012: Reported EPS at 1.11 vs. estimate at 0.92 (surprise of 20.7%). In Sep 2012: Reported EPS at 1.18 vs. estimate at 1.06 (surprise of 11.3%). In Dec 2012: Reported 1.27 vs. estimate at 1.21 (surprise of 5%. (Average earnings surprise at 16.85%).
  • Net institutional purchases in the current quarter at 873.2K shares, which represents about 13.69% of the company's float of 6.38M shares. Top holders are FMR LLC (10.89%), LSV Asset Management (5.39%), and Renaissance Technologies, LLC (4.22%).
  • Shares shorted have decreased from 3.78M to 3.70M over the last month, a decrease which represents about 1.25% of the company's float of 6.38M shares. Days to cover ratio at 19.71 days.

* Institutional data sourced from Fidelity, short data from Fidelity, price data from Yahoo! Finance, all other data sourced from Finviz.

Source: Shorts Are Covering 4 Stocks Reporting This Week With History Of Upside