Trade of the Day: Masonite International (NYSE:DOOR)

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If you know me at all, you know I like to focus on next-generation stocks, not the same group of names Wall Street gets stuck in. When thinking about NextGen stocks, though, I am sure nobody would come up with a company that makes doors. Well, guess what? It’s not only a major play in a long-term theme, it’s also a trading opportunity right now.

Let’s start with what the chart tells us. Masonite International (NYSE:DOOR), one of the leading door makers in the country, has pulled back 7% from its all-time high over the last month and came down to key support at the 50-day moving average. At the same time, the Relative Strength Index (RSI, at the bottom of the chart below), while not quite in oversold territory, is at the lowest level of the year. More importantly, it has started moving higher — a bullish signal.

Also important, the volume on the month-long pullback has been lower than the average volume during the rally that took the stock to a new all-time high.

A 2% move up on Monday has the stock further above its 50-day average, but I still like the reward-to-risk set-up here and would be a buyer, especially on pullbacks closer to the 50-day, currently around $76.30. If you like to use stop-losses in your trading, I would look to the $73.25 area, which is the prior all-time high from 2015 and is now considered support.

Longer-term, DOOR is also a major play in an industry that will be driven by the emergence of the millennials. As millennials start to form families and join the first-time home buyers club, which is becoming a bigger club all the time, demand for all things building will increase.

DOOR and its peer JELD-WEN (NYSE:JELD) control the majority of the door market in the U.S, accounting for over 80% of the residential interior door market. It’s also a secondary play on the continued housing recovery, driven by demand of those first-time homebuyers and interest rates that remain historically low.

Whether you’re trading or investing for the longer term, it pays to take your thinking beyond the obvious plays where the big money has often been made.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt is currently in the midst of an exciting launch centered around his trademark three-prong investing approach that targets the mega-trends old Wall Street is missing out on. His next-gen investing strategy is delivering enormous profits in stocks and ETFs. Click here for more information on his latest venture.


Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2017/04/trade-of-the-day-masonite-international-nyse-door/.

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