8 Oversold, Shorted Stocks Reporting Earnings Next Week, Being Bought by Smart Money

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Includes: ATPAQ, MED, OPEN, PODD, QDEL, S, TREX, VMC
by: Kapitall

Analysts look to the buying trends of institutional investors (a.k.a. the “smart money”) because they spend more time analyzing companies and have more knowledge about the companies than most investors.

We ran a screen on companies reporting Q2 earnings next week for those that have seen significant net institutional buying over the current quarter. We also screened for those stocks that are technically oversold, with RSI(14) below 40, and also highly shorted, with short float above 15%.

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

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


(Click to enlarge)

Do you think these stocks are being underestimated? Use this list as a starting-off point for your own analysis.

List sorted by net institutional purchases as a percent of share float.

1. Quidel Corp. (NASDAQ:QDEL): Diagnostic Substances Industry. Market cap of $510.82M. RSI(14) at 35.61. Short float at 19.14%. Company to report earnings on 08/02/11. Net institutional purchases over the last quarter at 4.8M, which is 18.71% of the company's share float. The stock is a short squeeze candidate, with a short float at 19.14% (equivalent to 27.02 days of average volume). The stock has gained 24.19% over the last year.

2. Trex Co. Inc. (NYSE:TREX): General Building Materials Industry. Market cap of $329.09M. RSI(14) at 36.81. Short float at 22.62%. Company to report earnings on 08/01/11. Net institutional purchases over the last quarter at 1.5M, which is 10.89% of the company's share float. The stock is a short squeeze candidate, with a short float at 22.62% (equivalent to 17.24 days of average volume). The stock has performed poorly over the last month, losing 18.18%.

3. Medifast Inc. (NYSE:MED): Specialty Retail, Other Industry. Market cap of $316.26M. RSI(14) at 32.41. Short float at 26.27%. Company to report earnings on 08/04/11. Net institutional purchases over the last quarter at 1.2M, which is 10.01% of the company's share float. The stock is a short squeeze candidate, with a short float at 26.27% (equivalent to 7.49 days of average volume). The stock has lost 35.39% over the last year.

4. Clearwire Corporation (CLWR): Wireless Communications Industry. Market cap of $2.84B. RSI(14) at 20.99. Short float at 27.88%. Company to report earnings on 08/03/11. Net institutional purchases over the last quarter at 14.5M, which is 9.72% of the company's share float. The stock is a short squeeze candidate, with a short float at 27.88% (equivalent to 8.9 days of average volume). It's been a rough couple of days for the stock, losing 9.18% over the last week.

5. Insulet Corporation (NASDAQ:PODD): Medical Instruments & Supplies Industry. Market cap of $957.06M. RSI(14) at 34.58. Short float at 18.63%. Company to report earnings on 08/02/11. Net institutional purchases over the last quarter at 3.6M, which is 7.87% of the company's share float. The stock is a short squeeze candidate, with a short float at 18.63% (equivalent to 19.3 days of average volume). It's been a rough couple of days for the stock, losing 7.71% over the last week.

6. ATP Oil & Gas Corp. (ATPG): Independent Oil & Gas Industry. Market cap of $789.95M. RSI(14) at 37.59. Short float at 37.48%. Company to report earnings on 08/01/11. Net institutional purchases over the last quarter at 2.7M, which is 6.95% of the company's share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.72). The stock is a short squeeze candidate, with a short float at 37.48% (equivalent to 13.54 days of average volume). The stock has gained 40.64% over the last year.

7. OpenTable, Inc. (NASDAQ:OPEN): Business Services Industry. Market cap of $1.76B. RSI(14) at 35.44. Short float at 19.73%. Company to report earnings on 08/02/11. Net institutional purchases over the last quarter at 1.5M, which is 6.83% of the company's share float. The stock is currently stuck in a downtrend, trading 10.24% below its SMA20, 11.57% below its SMA50, and 12.31% below its SMA200. The stock has gained 60.34% over the last year.

8. Vulcan Materials Company (NYSE:VMC): General Building Materials Industry. Market cap of $4.58B. RSI(14) at 31.84. Short float at 15.47%. Company to report earnings on 08/02/11. Net institutional purchases over the last quarter at 3.7M, which is 2.88% of the company's share float. The stock is a short squeeze candidate, with a short float at 15.47% (equivalent to 15.1 days of average volume). The stock has lost 22.31% over the last year.

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.