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5 Stocks Under $10 With Big Upside Potential

Stocks in this article: BWENHSOLBZHGMXRQUIK

Beazer Homes USA

One name under-$10 name in the homebuilding complex that's worth monitoring here is Beazer Homes USA (BZH), which designs, sells and builds single-family and multi-family homes. This is yet another stock that the sellers have done a number on, since shares are off by over 50% so far in 2011.

If you take a look at the chart for Beazer Homes USA, you'll notice that this stock has been uptrending for the last two months, with shares making mostly higher highs and higher lows. Anytime you see price action like this on any chart, it should be considered very bullish. It demonstrates that large traders are paying up to own shares each time the stock dips. This strong uptrend now sets up BZH for a big breakout if it can manage to clear some overhead resistance levels in the near future.

>>5 Homebuilder Stocks With Bright 2012 Outlooks

Traders should watch for BZH to trigger a breakout trade if the stock can manage to sustain a high-volume move and close above $2.43 a share. Look for volume on any breakout that registers close to or above its three-month average action of 2.3 million shares. If we get that breakout to trigger, then look for BZH to spike huge back toward its 200-day moving average of $3.09 or possibly much higher toward its next significant overhead resistance level at $3.68 a share.

You could be a buyer of this stock off any noticeable weakness and simply use a mental stop a few percentage points below your entry point. You could also buy off strength and get long once the stock sustains a move and close above $2.43 on high volume. I would use a mental stop a few percentage points below the $2.43 if you buy off strength. I would add to any long position then once the 200-day is taken out with volume.

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