As 2026 has started, investors may benefit from adopting an active approach to stock selection by monitoring potential breakout opportunities within defined price ranges. Under this strategy, a stock should be exited if it falls below its lower trading band, while a move above the upper band signals an opportunity to hold and ride further upside momentum.

Using this framework, Brookdale Senior Living Inc. (BKD Quick QuoteBKD - Free Report) , Itaú Unibanco Holding S.A. (ITUB Quick QuoteITUB - Free Report) , and Vale S.A. (VALE Quick QuoteVALE - Free Report) stand out as potential breakout stocks for 2026. All three have already delivered strong gains in 2025, with shares of Brookdale Senior Living up 114.6%, Itaú Unibanco up 63.6%, and Vale up 46.9%, signaling continued momentum this year.

Zeroing in on Breakout Stocks

To pick a breakout stock, calculate support and resistance levels. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price it trades at within a considerable period.

In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. The majority of traders are willing to go long on the stock at the resistance level, meaning they would like to add it to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.

Has a Genuine Breakout Occurred?

The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.

For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the established trading channel is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.

Screening Criteria Using Research Wizard:

• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases but whose gains are not excessive)

• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)

• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy-rated stocks can get through.)

Regardless of whether the market is strong or weak, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven track record of outperforming the market. You can see the complete list of today’s Zacks #1 Rank stocks here.

• Beta for 60 months less than or equal to 2

(Stocks that move more than the broader market but within a reasonable limit.)

• Current price less than or equal to $20 (Stocks reasonably priced)

These criteria narrow the universe of more than 6,853 stocks to only 23. 

Here are the top three stocks:

Brookdale Senior Living 

Brookdale Senior Living owns and operates senior living communities across the United States. Brookdale Senior Living has a Zacks Rank #2. BKD’s expected earnings growth rate for the current quarter is 56.8%.  

Itaú Unibanco 

Itaú Unibanco offers financial products and services to individual and corporate clients in Brazil and abroad. Itaú Unibanco has a Zacks Rank #1. ITUB’s expected earnings growth rate for the current year is 13.2%.  

Vale

Vale and its subsidiaries produce iron ore and nickel globally. Vale has a Zacks Rank #1. VALE’s expected earnings growth rate for the current year is 13.7%.