Long Position on FELE @ $59.75 on 9/28/2012 (Rumor)

Franklin Electric Co. (FELE) engages in the design, manufacture, and distribution of groundwater and fuel pumping systems.

It operates in two segments, Water Systems and Fueling Systems.

The Water Systems segment provides motors, pumps, electronic controls, and related parts and equipment primarily for use in groundwater, wastewater, and fuel transfer applications. Its motors and pumps are used principally for pumping fresh water and wastewater in various residential, agricultural, and industrial applications. This segment also offers electronic drives and controls for the motors, which control functionality and provide protection from various hazards, such as electric surges, over-heating, or dry wells and tanks.

The Fueling Systems segment provides pumps, pipe, sumps, fittings, vapor recovery components, electronic controls, monitoring devices, and related parts and equipment primarily for use in submersible fueling system applications. It also integrates and sells motors and electronic controls produced by the Water Systems segment. It operates primarily in the United States, Europe, South Africa, Brazil, Mexico, and China.

Shares have formed a bullish "Cup and Handling" and higher prices are expected for the stock. There is an interesting issue about this stock. It has a short ratio of 13.7. That is, if shares rise, 13.7 times its daily average volume of shares have to be bought to close those short positions. This is what is called a prime "short-squeeze" candidate.

We are now hearing rumors of good news for this firm that should propel the shares higher out of this formation, and trigger the short-squeeze!!

One of the rumors states that this stock will be named by the leading stock advisory service as one of its "top picks." This service is widely followed by mutual funds and institutional money managers. These investors have portfolios that mimic recommendations of this service. Their naming of the stock should lead to additional demand for the shares.

52-Week Trading Range:  $34.10 - $63.08

Last Trade:  $59.75

Stop Loss:   $56.75

Target Prices:  $65.73

Position closed on 11/6/2012 at price of $59.85 with a 0.17% gain in 39 days.

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