Home Depot (NYSE:HD) reported strong earnings and raised its forecast for future earnings. Wednesday morning Lowes (NYSE:LOW) reports its earnings. The strength of these two companies has been phenomenal. In fact it makes me want to cast a slightly wider net.
And there's another company in that sector that looks ready to outperform -- USG Corporation (NYSE:USG).
USG makes the stuff that Home Depot and Lowe's sell. The chart of the company’s stock price shows it went through a rough 6-month span ending in January. But since then it looks as good as the market segment it sits in.
After making a bottom in January the stock has gone straight up. It peaked on the day it reported earnings, April 21 and then pulled back slightly into the end of the month. As May started it reversed back higher and is holding at resistance at 28.70. Momentum is bullish, with the RSI in the bullish zone and the MACD crossing up and positive. It also printed a Golden Cross last week.
A push above resistance is the trigger to own the stock. Sized to a stop loss at 26, it offers a good reward to risk. But since it does not pay a dividend, you might consider using the June 28 Calls to limit risk to less than $1.50 per share.