ATML Earnings Action

A major bear market rally seems to be imminent so here are a few names that have already started to move up and could see some additional upside in the coming days and weeks ahead due to short covering.

Chipotle Mexican Grill Inc. (CMG) – 4.9 million shares short or 34.7% of the float. 551,529 is the avg. daily volume. Chipotle last week said its quarterly sales grew 19% thanks to 20 new restaurants and existing restaurant sales grew by 3.1%, not the gloom and doom decline that was feared. The company also announced a $100 million share repurchase program equivalent to 7.5% of the outstanding common stock. But make sure to temper your optimism with the fact that full year comparable restaurant sales for 2009 are only expected to increase in the low single digits range.

Target Corp. (TGT) – 45.8 million shares short which is up 18.1% from 38.8 million from the prior reporting period of 9/30. Retailer recently hit a new 52-week low and trades at just 10.1x 2009 earnings of $3.50. It’s probably not a good idea to bet against Pershing Square’s Bill Ackman who has accumulated about 10% of the stock and is going to convince Target to unlock some of the value of its real estate holdings. Details of a plan are due out Wednesday.

Aeropostale Inc.(ARO) – 19.2 million shares short or 29% of the float. 4.2 mil is the average daily volume and the stock trades at just 9.67 times 2009 full year earnings of $2.41 a share. Four firms have flocked to Aeropostale in the past two weeks initiating coverage with a positive rating. The retailer posted a surprising 5% jump in same-store sales for September and backed its third quarter earnings outlook earlier this month - something you rarely see these days.

KBR Inc. (KBR) – Saw a massive spike in short interest from 2.9 million shares to 7.4 million in a span of a couple weeks which is nothing but a huge bear raid. Company expects to make $1.72 a share for 2008 though that could easily be revised downward when the company reports on Oct. 31. However, downside should be minimal since the company has $1.56 billion in cash or $9.16 a share. Stock sells for just $12.05.

*All data as of the latest reporting date of 10/15 from WSJ Market Data Group