Another under-$10 stock in the home improvement complex that looks poised for higher prices is Builders FirstSource (BLDR). This company is a supplier and manufacturer of structural and related building products for residential new construction. This stock has been on fire so far in 2012 with shares up around 80%.
If you take a look at the chart for Builders FirstSource, you'll notice that this stock has been uptrending extremely strong for the last six months, with shares soaring from a low of $1.70 to a recent high of $4.55 a share. During that monster move higher, shares of Builders FirstSource have mostly made higher highs and higher lows, which is bullish technical price action. During the last month, this stock has trended sideways a bit between $3.38 and $4.48 a share. That sideways action is now setting up BLDR to take out its 50-day moving average moving average at $3.91 and potentially spike significantly higher.Market players should now look for long-biased trades in BLDR if it can manage to trigger a breakout trade above its 50-day at $3.91, and then above some near-term overhead resistance at $4.10 a share with high volume. Look for volume on a sustained move or close above those levels that register near or above its three-month average action of 371,216 shares. If that breakout triggers soon, then BLDR will setup to re-test its 52-week high at $4.55 a share and possibly take that level out. If you're bullish on BLDR, then one could anticipate the breakout and look to buy this stock off weakness and simply use a stop around $3.38 a share. One could also buy off strength and get long once it clears its 50-day at $3.91 with high-volume. Any high-volume move below $3.38 would keep me away from BLDR for now.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV