In the recent market sell-off, several stocks have been pushed into oversold territory, presenting potential opportunities for a future rebound. The S & P 500, Nasdaq Composite, and Dow Jones Industrial Average all experienced significant losses, with the Nasdaq entering correction territory. Despite the challenging start to August, some companies may be poised to bounce back in the near future.
One of the heavily oversold stocks is cybersecurity firm CrowdStrike, with a remarkably low RSI score of just 13.6. The stock has faced a decline of 12.5% week to date, primarily due to a worldwide IT outage in late July. However, analysts remain bullish on CrowdStrike, with a consensus price target suggesting a significant 66% surge from current levels.
Another oversold name is Moderna, a drugmaker that has seen a decline of around 23% week to date following disappointing quarterly earnings. Despite the challenging outlook, the average price target on shares indicates a potential surge of 58.1% from Thursday’s closing price. While some analysts remain cautious and rate it a hold, there is optimism about the stock’s recovery potential.
Athleisure brand Lululemon is also on the oversold list, with an RSI of approximately 28. The stock was downgraded by Goldman Sachs from buy to neutral, citing execution challenges and lackluster innovation launches. Despite the downgrade, around two-thirds of Wall Street analysts still maintain buy or strong buy ratings on Lululemon, with the average price target suggesting a significant 56.5% upside potential.
While some stocks are oversold and primed for a rebound, there are also names that are overbought and could see a pullback despite the broader market sell-off. Companies like defense giant Lockheed Martin, tobacco company Philip Morris International, and FirstEnergy are among the most overbought stocks of the week.
Lockheed Martin, in particular, stands out with the highest 14-day RSI reading of 93.7. Despite strong global demand for its products, the stock is already trading 1.8% above its consensus price estimate, indicating a possible pullback in the future. Bank of America recently upgraded the stock to buy, but with only 11 out of 24 analysts bullish on the stock, caution is warranted.
As the market experiences volatility and fluctuations, it is crucial for investors to carefully analyze oversold and overbought stocks to identify potential opportunities for profit. While oversold stocks like CrowdStrike, Moderna, and Lululemon offer a chance for recovery and significant upside potential, overbought stocks like Lockheed Martin may face a pullback.
Investors should consider a balanced approach, diversifying their portfolios and carefully evaluating the risk-return profile of each stock. By staying informed about market trends and conducting thorough research, investors can make informed decisions and capitalize on opportunities for growth in a challenging market environment.