The recent market sell-off has brought about significant fluctuations in the stock market, with the S & P 500, Nasdaq Composite, and Dow Jones Industrial Average all experiencing a decline of more than 2%. The weak U.S. jobs report has further exacerbated fears of a broader economic slowdown, contributing to the downward trend in the market. Despite the challenging start to August, there are opportunities for certain stocks to potentially rebound in the future.
Using the CNBC Pro Stock Screener Tool, stocks that are deemed oversold can be identified by analyzing their 14-day relative strength index (RSI). A RSI score below 30 indicates that a stock is oversold and may be trading at an attractive entry point, while a score over 70 suggests that a stock is overbought and may see a decline soon.
One of the most oversold stocks on the list is cybersecurity company CrowdStrike, with an RSI of just 13.6. Despite facing challenges such as a worldwide IT outage leading to flight delays and hospital disruptions, analysts covering the stock remain bullish, rating it as either a buy or a strong buy. The consensus price target indicates a potential surge of 66% from its current levels.
Moderna, a drugmaker, is another heavily oversold name, with a 14-day RSI score of 19.6. Although the company reported disappointing quarterly earnings, the average price target suggests a potential surge of 58.1% from its closing price. However, some analysts choose to remain cautious and rate it as a hold.
Another oversold stock is athleisure brand Lululemon, with an RSI of around 28. Despite facing challenges such as execution issues and lackluster innovation launches, the majority of Wall Street analysts maintain buy or strong buy ratings on the stock. The average price target implies an upside potential of 56.5% from its closing price.
While there are oversold stocks with the potential for a rebound, there are also overbought stocks that could see a pullback despite the broader market sell-off. Companies such as defense giant Lockheed Martin, tobacco company Philip Morris International, and FirstEnergy are among the most overbought names this week. Lockheed Martin, with the highest 14-day RSI reading of 93.7, has already been upgraded to a buy by Bank of America. However, the stock is trading above its consensus price estimate, indicating a possible pullback in the near future.
The recent market sell-off has created opportunities for investors to identify oversold stocks that may rebound in the future. By analyzing RSI scores and considering analyst recommendations, investors can make informed decisions on potential stock purchases. It is important to exercise caution and conduct thorough research before investing in any stock, especially during periods of market volatility.