Why I think TOL could gain another 20%

Author: Michael Arold

Covestor model: Technical Swing

Disclosure: Long TOL

I like homebuilder stocks.

In fact, I believe they could be the “trade of the year” in 2012.

My favorite one is Toll Brothers (TOL), which I own for the Covestor model portfolio.

Below is a long term chart of the stock.

Note how TOL has been trading in a range for the last five years.

Last week, the stock broke out of that range to the upside on good relative strength and volume. The next major resistance is coming up around $35, which is about 20% higher than current price.

I think that’s where we’re heading this year.

Source: MichaelArold.com