Oversold stocks are like underdogs in the stock market. They are stocks that have lost interest and are currently selling for less than they ought to.
However, don’t write them off just yet! These stocks might be ready to make a comeback and increase in price. That’s why some savvy investors, called momentum traders, try to take advantage of this situation. They buy these oversold stocks when they’re cheap and sell them later when the prices go up.
Analysts use different tools to figure out if a stock is oversold. The price-to-earnings (P/E) ratio is a common measure. It shows how much investors are paying for each dollar the company earns. A low ratio indicates that the stock could be undervalued. The price-to-sales ratio (P/S) is another metric that may be used for detecting undervalued stocks. The stock looks more attractive if the ratio is lower.
Additionally, there is a tool that gauges how rapidly a stock’s price is moving called the relative strength index (RSI). It’s like a speedometer for stocks. The RSI score ranges from zero to 100. When it drops below 30, many analysts think the stock is oversold. But if it goes above 70, it might mean the stock is becoming too expensive.
It’s crucial to keep in mind that RSI scores fluctuate every day, so by the time you read this, the figures I’m going to discuss could not be correct. Investors should use these indicators along with their own research before making any decisions.
Now, let’s take a look at five oversold stocks to keep an eye on in July:
Agilent Technologies Inc. (A)
Agilent is a company that has caught the attention of investors. Its Relative Strength Index (RSI), which monitors how a stock’s price changes, has recently been declining. It peaked at around 63 at the start of the year, but has since declined. On June 8, it dropped to 26.55, but it has started to recover and is now in the 40s. This suggests that the stock may have been oversold and is due for a comeback.
Agilent’s Price-to-Earnings (P/E) ratio is also reasonable at 26.67. The P/E ratio tells us how much investors are paying for each dollar the company earns. In this case, the ratio suggests that the stock is not overpriced compared to its earnings.
Moreover, analysts have given Agilent a high rating for its economic moat. This means that they believe Agilent has competitive advantages that will keep other companies in the same industry from overtaking it for at least 20 years. These advantages include tangible tools used in testing, like chromatography and mass spectrometry, as well as intangible assets such as intellectual property and ongoing innovation. These factors contribute to Agilent’s strong returns on invested capital.
Agilent also excels in its capital allocation, meaning that it makes smart decisions about how to allocate its financial resources. It has a strong balance sheet and a great investment strategy. Agilent expects these practises to result in long-term economic gains for both the company and its stockholders.
Well-known financial research companies, have given Agilent four stars, indicating that they consider it a good investment opportunity. According to research companies, Agilent’s fair market value is estimated to be $151, while it closed at $118.72 on June 22. This suggests that the stock is trading at a price lower than its actual worth.
Waters Corp. (WAT)
Waters Corp., a company that provides medical technology, has been going through some changes in the stock market. The Relative Strength Index (RSI), which shows how a stock’s price is changing, dropped below 30 last month. But don’t worry, as of June 20, it started moving in a positive direction and is on the rise again. This indicates that the stock could have been oversold and may be bouncing back.
The company recently revised its fair value assessment, which acts as a proxy for the stock’s true value. They did this by lowering their assumptions about the cost of equity for Waters Corp., which means they expect the company to perform more similarly to other companies in the same industry.
According to some senior equity analyst, businesses in the life science sector, like Waters Corp., are known for being strong and diverse. When it comes to their stock valuation, these companies are nevertheless often seen as being expensive.
After experiencing a period of high growth during the pandemic, the financial results of life science companies started to normalize in late 2022. As a result, the stock prices dropped from their recent highs to more reasonable levels, although they might still be considered discounted.
Analysts believe that the current market perception of Waters Corp. is narrow-minded and fails to see the potential for growth during the “reset” of 2023 and beyond.
Let us have a look at some other important information. Waters Corp’s price-to-earnings (P/E) ratio. is 22.92, which is very reasonable.The P/E ratio shows how much investors are paying for each dollar the company earns. In this case, the ratio suggests that the stock is not too expensive compared to its earnings.
Additionally, Waters Corp. receives high ratings for having a wide economic moat, meaning it has strong competitive advantages, and for making wise financial decisions in terms of capital allocation.
Well known research companies that analyzes stocks, gives Waters Corp. a four-star rating, which means it could be a good investment opportunity. These companies estimate that the fair value of the stock is $323, but it closed at $260.28 on June 22. This suggests that the stock might be undervalued based on its true worth.
Estee Lauder Co., Class A (EL)
Estee Lauder, a global producer of beauty products, has faced challenges due to slow travel retail. According to senior equity analysts, the business still has a good long-term growth predictions.
They believe that Estee Lauder’s competitive position and investments in marketing and innovation provide a wide moat of protection against inflation and disruptions in the supply chain.
When we look at Estee Lauder’s Relative Strength Index (RSI), which measures how a stock’s price is changing, it dropped to just over 20 on May 4. It has since ranged from the mid-20s to the low-30s.
Like most stocks, Estee Lauder’s RSI experienced a rise during the week of June 12, as investors became more optimistic after hearing that the Federal Reserve might postpone its next interest rate increase. However, with an RSI still in the low 50s, it remains well below the levels that indicate an overbought condition.
In comparison to its biggest rivals, like L’Oreal SA and LVMH Mot Hennessy Louis Vuitton SA, Estee Lauder has a lower price-to-sales (P/S) ratio. If a stock’s P/S ratio is lower than its competitors, it indicates that the stock is undervalued in its sector.
Reputable financial research companies have given Estee Lauder four stars and provided a fair value estimate of $253 for the stock. On June 22, however, the stock’s closing price was $195.54.
AT&T Inc. (T)
There has been some concern about the impact of Amazon’s potential entry into the wireless resale business on wireless carriers. However, analysts and experts remain optimistic about the future of national carriers like AT&T.
They think the industry is in a favourable position since the three national carriers currently compete on a level playing field. This means that they are on equal footing and have similar offerings, which reduces the need to aggressively compete for market share. This competitive rationality bodes well for the future of carriers like AT&T.
Looking at the numbers, AT&T appears to be an attractive investment. Its price-to-sales ratio is 0.95, which is lower than Verizon’s ratio of 1.12 and T-Mobile’s ratio of 2.01. This indicates that AT&T is priced more attractively compared to its competitors.
In terms of technical analysis, the Relative Strength Index (RSI) for T-Mobile stock fell below 20 in late May. Since then, it has fluctuated between the mid-20s and mid-30s, with a brief jump into the low 40s on June 7th.The RSI is a measure of how overbought or oversold a stock is, and these fluctuations suggest some volatility in T-Mobile’s stock price.
Research Companies have given a five-star rating to AT&T’s stock, indicating a positive outlook. Despite this, AT&T’s fair market value estimate remains unchanged at $25.
However, on June 22 the stock closed at a low of $15.58. This suggests that the stock may be undervalued relative to its fair market value.
Hibbett Inc. (HIBB)
Hibbett Inc. is a sports store that you can find in certain parts of the Midwest and Southern United States. This is a great place to buy gear and sporting equipment. The interesting thing about this company is that it is currently considered undervalued by investors. This means that they think the stock is worth more than its current price.
To understand why investors believe this, we can look at some key statistics. One of them is the price-to-earnings ratio, which measures how much investors are willing to pay for every dollar a company earns.
In the case of Hibbett Inc., this ratio is very low, around 4. This is a good sign because it means that investors pay only $4 for every dollar of profit earned by the company. It suggests that the stock might be a good deal.
Another important number is return on equity (ROE), which measures how well a company uses its shareholders’ money to generate profits. Hibbett Inc. has a pretty strong ROE of around 35%, which is higher than the average for similar specialty retail stores, which is about 24%. This shows that the company is doing well in creating money for its investors.
Most recently, on June 12, the Hibbett Relative Strength Index (RSI) rose above 30 for the first time since mid-May. RSI is a technical indicator that tells whether a stock is overbought or oversold. When it goes above 30, it suggests that the stock may be starting to recover from a period of decline. This is a positive sign for investors.
According to analysts at research companies, they believe that a fair value for Hibbett Inc. is around $64.94 per share. However, on June 22, the stock closed at a low of $37.42. Research companies rate the stock with four stars, which is already a good rating. But if the price drops below $37.42, they would upgrade it to five stars, indicating an even better investment opportunity.