Twinkies Stock Tests Pivotal Chart Level

Hostess Brands just received its third bull note this month

Hostess Brands Inc (NASDAQ:TWNK) is trading up 1.7% this morning at $14.13, following yet another bull note for the packaged food concern. UBS upgraded its opinion to "buy" from "hold" and lifted its price target to $17 from $14, representing the third positive analyst update this month for Hostess Brands. TWNK stock briefly topped $17 back in mid-2017, but hasn't topped the level since.

Looking closer, the shares are testing the $14 area, which is the site of a huge bear gap from last August. The equity topped the $14 level back in May after a well-received earnings release, but quickly pulled back. Still, the security sports a 27% year-to-date lead, while its 52-week high is $14.70.

Coming into today, half the analysts in coverage still had "hold" recommendations on the stock, and the average 12-month price target was $14.88. Options activity has remained quiet, too, with just 81 combined calls and puts bought to open during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

One way TWNK could keep rallying is if short sellers begin to throw in the towel. Going by average daily trading volumes, the 17.92 million shares sold short represent more than 13 days' worth of buying power, pointing to huge potential for a short squeeze going forward.