These are the most oversold stocks in the market that could be primed for a comeback
This week’s sell-off in technology and AI-related stocks opened the doors to a host of buying opportunities, according to one popular technical metric. Each of the major U.S. indexes on Thursday suffered their worst day in over a month as investors continued to rotate out of the market’s biggest technology stocks, reflecting concerns about elevated valuations tied to the AI trade. The Nasdaq Composite rebounded on Friday, making up some of its previous declines, but remains lower by 3.5% in November. Using the CNBC Pro stock screener, we looked for stocks in the S & P 500 that came under sharp pressure this week and whose 14-day relative strength index, or RSI, has fallen so low that they’re now considered oversold. We found several, ranging from database management software provider Oracle to french fry maker Lamb Weston Holdings . Stocks with a 14-day RSI below 30 are considered oversold, meaning they could soon be due for a bounce. Take a look at the names that showed up on the screen: Oracle , which also provides cloud infrastructure services, was one of the most oversold stocks with an RSI of a little more than 24. Oracle shares were down almost 6% this week, bringing its loss since its Sept. 10 high to some 35%. Even with that, the stock remains higher by 35% this year. Shares have been recently been battered by concern that Oracle is too reliant on debt markets to fund the buildout of its AI infrastructure deals. After the market recently soured on Oracle, Bank of America on Wednesday reinstated credit coverage of Oracle debt at market weight and called for a clearer financial policy in its capital-intensive business. “We believe recent spread underperformance incorporates a reasonable discount for a lengthy list of concerns that are likely to remain overhangs in the medium term, given the early stages of ORCL’s AI infrastructure build out,” analyst Tom Curcuruto said in the report, adding that positive catalysts for Oracle’s growth are offset by credit negatives such as AI competition, capex uncertainty and negative free cash flow. Super Micro Computer is a chipmaker that made the oversold list. The stock, which has an RSI of less than 27, has lost 30% in November alone and is down 45% from its February peak. Narrower gross profit margin and fiscal first-quarter results, which missed analysts’ earnings and revenue estimates, have knocked sentiment. Analysts who cover Super Micro have mixed ratings on the stock, but their consensus price target still suggests nearly 23% potential upside ahead, according to LSEG. Of the 20 analysts who cover Super Micro, two have a strong buy on the stock, seven rate it a buy and eight a hold. SMCI 1Y mountain Super Micro Computer stock performance over the past year. Lamb Weston, a producer and distributor of frozen potato products, is the most oversold stock on the screen RSI below 29. Shares are down 11% in the past month and 32% since their 52-week high last December amid weaker consumer demand. But despite the stock’s underperformance, analysts polled by LSEG expect Lamb Weston can gain about 17% over the coming year. In its fiscal first quarter ended in August, Lamb Weston showed progress in cutting costs and beat analysts’ adjusted earnings and revenue expectations, according to FactSet. Other oversold names at the end of this week were Molina Healthcare and Charter Communications.
