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TheStreet Open House

5 Stocks Under $10 With Big Upside Potential

Commercial Metals

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One name that's just started to trade over $10 a share and looks poised for higher prices is Commercial Metals (CMC), which recycles, manufactures, fabricates and distributes steel and metal products and related materials and services through a network of locations throughout the U.S. and internationally. This stock has been an underperformer this year, with shares down by over 30%.

On Wednesday, corporate raider-turned-activist-investor Carl Ichan nominated three directors to the board of Commercial Metals. Icahn current controls over 10% of the company's shares.

If you take a look at the chart for Commercial Metals, you'll notice that this stock was whacked lower by the bears from its July high of $14.88 to a recent low of $8.55 a share. Since hitting that low, the stock has rebounded to its current price of just over $10.50 a share. This stock has also just started to move back above its 50-day moving average of $10.69 a share on solid volume.

Traders should know keep an eye on this stock for a breakout trade if it can manage to move above some past overhead resistance levels at $11.13 to $11.32 a share and then $12 a share on strong volume. A strong-volume move above those levels should set this stock up to make a monster run back towards $14 a share or possibly even higher. Make not that this stock has also been making higher lows, which is a bullish technical sign. If that trend continues, this stock sets up nicely of we can see that breakout trigger in the coming days or weeks.

One could be a buyer of this stock on any weakness and anticipate the breakout, or just wait for the stock to clear $11.13 with volume. I would use a tight mental stop just below the 50-day moving average of $10.69 if you buy of weakness. I would add aggressively to any long position once the stock takes out $12 a share with volume.

Commercial Metals, with a current yield of 4.3%, is one of the highest-yielding metals and mining stocks.

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