Buy low and sell high. It's easy to understand, but it's a strategy that can be difficult to execute for even the most disciplined investor. And let's face it, if it were easy, everybody would do it.
One of the issues is knowing when to buy and when to sell. That's where technical analysis can be helpful. One indicator that many investors are familiar with is the Relative Strength Indicator (RSI). This can help investors determine a stock's buying or selling momentum.
When a stock starts to move higher, other buyers tend to pile in. And when that buying gets mixed with some fear of missing out (FOMO), the stock gets overbought. That's when short sellers start to jump in.
Conversely, when a stock starts to move lower, many investors are filled with fear, uncertainty, and doubt (FUD) and begin to sell. That's when a quality stock can get oversold, and patient buyers grab the discounted shares.
Typically, a reading under 30 indicates a stock is oversold. In this special presentation, we highlight seven stocks with an RSI reading at or near 30 as of April 2024. Keep in mind this is an indicator that can move in either direction very quickly.
Quick Links
- Tesla
- Air Products and Chemicals
- Infosys
- Laboratory Corp.
- Medifast
- Waters Corporation
- Stride
#1 - Tesla (NASDAQ:TSLA)
Tesla Inc. (NASDAQ: TSLA) was one of the Magnificent 7 stocks in 2023 but has been one of the worst-performing stocks in 2024. TSLA stock is down 36% in 2024, erasing all of its 12-month gains and then some.
How you feel about Tesla comes down to what you believe Tesla is. If it's only, or primarily, an electric vehicle (EV) company, then Tesla stock may have much farther to fall. However, if you're in the camp that Tesla is a technology company that includes areas like autonomous driving which puts it into the artificial intelligence (AI) conversation. And don't forget that Tesla is the unquestioned leader in the still-emerging EV charging space.
TSLA stock is at 36.6 on the relative strength indicator and is currently one of MarketBeat's lowest-rated stocks. It's also one of the stocks with the most analyst downgrades. However, at its current price of around $155, analysts still give TSLA stock a 26% upside. That means if the stock continues to drop, it could become too attractive for investors to pass up.
About Tesla
Tesla, Inc designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, body shop and parts, supercharging, retail merchandise, and vehicle insurance services.
Read More - Current Price
- $342.03
- Consensus Rating
- Hold
- Ratings Breakdown
- 14 Buy Ratings, 16 Hold Ratings, 9 Sell Ratings.
- Consensus Price Target
- $230.18 (32.7% Downside)
#2 - Air Products and Chemicals (NYSE:APD)
Air Products and Chemicals Inc. (NYSE: APD) is in the field of industrial gases. What this sector lacks in excitement, it makes up for in reliable revenue.
The company generated $12.6 billion on the top line in 2023. That was on par with the revenue it generated in 2022. But it's the bottom line that should draw investor attention. Air Products and Chemicals has been delivering double-digit earnings growth every year since 2014.
Investors also get a dividend aristocrat that has increased its dividend for 49 consecutive years. The dividend yields 3.11% and pays out $7.08 per share annually.
APD stock has an RSI of around 37. The stock is down over 16% in 2024 due to the company's poor first quarter earnings report they delivered in February. However, the Air Products and Chemicals Analyst Ratings on MarketBeat have a $276.36 price target for the stock, which would be a 21.3% increase.
About Air Products and Chemicals
Air Products and Chemicals, Inc provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals.
Read More - Current Price
- $327.85
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $331.53 (1.1% Upside)
#3 - Infosys (NYSE:INFY)
Infosys Limited (NYSE: INFY) is a global leader in next-generation digital services and consulting, including artificial intelligence (AI) and cloud services. The company is based in India, one of the emerging economies investors are watching closely.
As much talk as there is of the U.S. trying to onshore supply chains, India remains a popular destination for companies that are looking to outsource their IT. And once they sign on with Infosys, the company notes that it has a low attrition rate of around 15%. The company is seeing growing demand for AI-based services, particularly in its home country, even while acknowledging that the buildout of an AI infrastructure may be delayed for some of its customers.
INFY stock has an RSI of 26.25 after a sharp sell-off that began in February 2024 as the appetite for tech stocks diminished. Still, analysts are projecting high single-digit earnings growth in the next 12 months, and two analysts upgraded the stock in April 2024.
About Infosys
Infosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. It provides digital marketing and digital workplace, digital commerce, digital experience and interactions, metaverse, data analytics and AI, applied AI, generative AI, sustainability, blockchain, engineering, Internet of Things, enterprise agile DevOps, application modernization, cloud, digital process automation, digital supply chain, Microsoft business application and cloud business, service experience transformation, energy transition, cyber security, and quality engineering solutions; Oracle, SAP, and Saleforce solutions; API economy and microservices; and Topaz, an AI-first set of services, solutions, and platforms using generative AI technologies.
Read More - Current Price
- $22.00
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $20.85 (5.2% Downside)
#4 - Laboratory Corp. (NYSE:LH)
Laboratory Corp. (NYSE: LH), or LabCorp, as it's more commonly known, is one of the leading providers of diagnostic (lab) testing and drug development. It's a business model that provides predictable revenue that has seemed to be a good investment with the aging of America.
The company saw revenue and earnings surge in 2021 based on a need for Covid-19 testing. But the story now is one of normalization. In the quarter just passed, LabCorp saw a 3.5% decrease in revenue from its Covid-19 testing. And that was a key reason why revenue and earnings were lower year-over-year.
This creates a scenario where revenue and earnings are around 2019 levels, but LH stock is trading well above those levels. On the other hand, the RSI for the stock is around 25.7.
Something has to give, and analysts may provide the answer. There is broad bullish sentiment for LH stock with a consensus price target of $243.50, giving investors about 20% growth from the stock's April 17, 2024 price.
About Laboratory Co. of America
Labcorp Holdings Inc provides laboratory services. It operates through two segments, Diagnostics Laboratories and Biopharma Laboratory Services. The company offers various tests, such as blood chemistry analyses, urinalyses, blood cell counts, thyroid, PAP, hemoglobin A1C and vitamin D, prostate-specific antigens, sexually transmitted diseases, hepatitis C, microbiology cultures and procedures, and alcohol and other substance-abuse tests.
Read More - Current Price
- $237.85
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $255.92 (7.6% Upside)
#5 - Medifast (NYSE:MED)
Next on this list of oversold stocks is Medifast Inc. (NYSE: MED). The company is in the weight loss sector. However, it addresses the problem in the "old school" way. That means it sells weight loss foods and beverages under the OPTAVIA, OPTAVIA ACTIVE, and Optimal Health brand names.
MED stock is down 66% in the past 12 months and 55% in 2024 alone. It's not hard to understand why. Over the last year, multiple companies have come to market with GLP-1 obesity drugs that are changing the way many people are addressing weight loss. Investors can see this shift in Medifast's revenue and earnings, which are down sharply year-over-year.
MED stock checks in with an RSI of 36.57. This indicates that after the steep sell-off in the last 12 months, buyers may sense that the stock is creating some value. Analysts generally agree. They still have a consensus Hold on the stock, but price targets suggest an upside for patient investors.
About Medifast
Medifast, Inc, through its subsidiaries, engages in the manufacture and sale of weight loss, weight management, and healthy living products in the United States and the Asia-Pacific. It offers bars, puffs, cereal, crunchers, drinks, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups under the OPTAVIA, OPTAVIA ACTIVE, and Optimal Health brand names.
Read More - Current Price
- $18.18
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $17.00 (6.5% Downside)
#6 - Waters Corporation (NYSE:WAT)
The robotics sector is expected to grow tremendously as AI continues to evolve. Waters Corporation (NYSE: WAT) is one of the leading Robo-Lab stocks. Waters is in the company of Thermo Fisher Scientific Inc. (NYSE: TMO), and one of its specialties is analytical chemistry and separation techniques.
In the last year, Waters has taken steps to increase its level of automation. But that's not being accounted for yet. The reason Waters is down 4.7% for the year and has an RSI of 28 can be found in the company's February report. The company beat analysts' expectations for revenue and earnings. However, it missed on the top and bottom lines year-over-year.
That tracks with Thermo-Fisher, which also reported seeing stable, but not growing, demand in the next year. Analysts are also lukewarm on WAT stock. They have a consensus Hold rating on the stock with a price target of $325.72, which is only a 6% increase from its current price.
About Waters
Waters Corporation provides analytical workflow solutions in Asia, the Americas, and Europe. It operates through two segments: Waters and TA. The company designs, manufactures, sells, and services high and ultra-performance liquid chromatography, as well as mass spectrometry (MS) technology systems and support products, including chromatography columns, other consumable products, and post-warranty service plans.
Read More - Current Price
- $357.69
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $365.85 (2.3% Upside)
#7 - Stride (NYSE:LRN)
Stride Inc. (NYSE: LRN) provides online learning tools primarily for K-12 students. With students back in the classroom, you might expect the company's revenue and earnings to be falling. But that's not the case. Over the last year, Stride has continued to beat on the top and bottom lines.
And as the company continues to grow, its profit margins are also expanding. One example of that growth came between the third and fourth quarters of 2023. The company's net profit margin grew by over 1,200% during that time.
However, after charging 51% higher in the last 12 months, LRN stock is down 2.8% this year. But even with a small downturn, the stock has moved into oversold territory with an RSI of 29.
However, analysts give the stock a Strong Buy rating with a consensus price target of $71.75, giving investors a 24% upside.
About Stride
Stride, Inc, a technology-based education service company, engages in the provision of proprietary and third-party online curriculum, software systems, and educational services in the United States and internationally. Its technology-based products and services enable clients to attract, enroll, educate, track progress, support, and facilitate individualized learning for students.
Read More - Current Price
- $102.80
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 5 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $90.17 (12.3% Downside)
Many buy-and-hold investors don't think much about whether a particular stock is oversold. The whole idea of taking a long position is so that you're not fixated on a stock's daily or weekly movement. However, even if you have a long position in a stock, paying attention to its momentum based on tools like the RSI can help you strategically and profitably add to your position.
It's also important to note that the RSI gives you an idea about a stock's momentum. Even many traders will say that momentum is one of several indicators they consider. If you're considering taking a long position, you'll want to understand why the stock is moving in that direction and if there's a long-term upside to owning the stock.
MarketBeat has a tool to help you find oversold stocks based on the Relative Strength Indicator (RSI). You can find it under Technical Indicators inside the Stock Tips menu.
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