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One under-the-radar stock could be best way to play housing rebound

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One under-the-radar stock could be best way to play housing rebound

Homebuilder stocks are building on a breakout.

The XHB homebuilder ETF rallied 4% on Wednesday, adding to a 45% surge so far this quarter.

Todd Gordon, managing director at Ascent Wealth Partners, sees it as a trend that should continue.

"Our theme here … is nesting and investing and what that means is basically people are staying at home, investing in their houses. We're seeing a lot of response in the homebuilding sector as well as the home improvement stores," Gordon said Tuesday on CNBC's "Trading Nation."

It's not just homebuilders such as Lennar and D.R. Horton that should benefit, he says – Masco, which manufactures products such as cabinetry and plumbing parts, could be on its way back to record highs.

"You can see the stock took a big drop from $50 all the way to $27 and we've since retraced almost all of that move. We just saw a strong earnings report [in late April]. The stock didn't act too well right after earnings but then we've started to see a nice move up as we get some more upgrades coming for the stock. We're within a stone's throw of the all-time high of around $50," said Gordon.

Masco closed Wednesday at just over $47. It hit a record high of $50.06 in February.

Rather than buy the stock outright, Gordon is putting on an options trade with October expiration. He is buying the 45 call that expires Oct. 16 and selling the 55 call on the bet Masco breaks out to new all-time highs.

Masco shares are up 36% this quarter. The stock is also up 15% for the month.

Disclosure: Ascent Wealth Partners holds Masco. 

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