Start Building a Position in This Building Supplier

Masco Corp. (NYSE:MAS) — This company manufactures a range of home improvement and building products including faucets, cabinets, coatings and windows, and installs insulation in new homes. The increase in pending home sales released on Dec. 30 resulted in an 8.41% gain for MAS with the stock closing at $10.70.

The company is expected to report earnings of 20 cents per share for 2011 versus a $3 loss in 2010. And S&P estimates earnings of 55 cents in 2012. S&P’s target is $12, but it expects the stock will go even higher as earnings targets are met. MAS has a dividend yield of 2.86%.

Technically the stock ran to its 200-day moving average on the better pending home sales report. The stock then punched through its 200-day moving average at $10.65, which should result in a quick run to $14.

But the stochastic is now overbought, and so the stock could fall to under $11 on profit-taking. Take a half position now and a full position on a pullback. Longer term, this stock is capable of a major advance north of $18.