Five For Friday- Six Most Oversold Stocks

This week, we revisit our proprietary Relative and Absolute analysis within SimpleVisor to provide the most oversold stocks. We introduced this tool in our initial screen, where we provided an overview of the Relative and Absolute analysis. For your convenience, we include that excerpt below.

“Our relative analysis model generates a history of the price ratio of each sector to the S&P 500, as well as the sector’s top ten holdings versus the sector ETF itself. It then applies multiple technical studies to the data. It scores them based on the degree to which each technical study is overbought or oversold and how they changed over various periods. Indicators are weighted by importance. The analyses include 20-, 50-, and 200-day moving averages, MACD, RSI, and Williams. The total score is normalized to a range of +1 to -1. We consider a score of +/- .75 strongly overbought or oversold. We have yet to see a perfect score of +/-1.”

The absolute analysis model uses identical calculations, but they are solely based on the price of the ETF or stock, not a ratio versus another index.

We combine relative and absolute analysis to help us find overbought or oversold companies relative to the S&P 500 and its respective sectors. SimpleVisor can chart the movement of the two indicators over time. As shown, over the last three weeks, XLU has remained oversold on both an absolute and relative basis.  

Often the most oversold or most overbought scores revert toward fair value. The overbought/oversold signals are strengthened when our proprietary money flow analysis provides a similar conclusion.  

Screening Criteria

We considered the following factors when screening:

• Top Ten holdings of the four most oversold sector ETFs: Staples (XLP), Utilities (XLU), Industrials (XLI), and Materials (XLB)
• Lowest combined relative and absolute scores versus the sector ETF
• We chose six stocks to ensure one from each sector was included.

Company Summaries

United Parcel Service, Inc. (UPS)

Lockheed Martin Corporation (LMT)

Corteva, Inc. (CTVA)

The Coca-Cola Company (KO)

Dominion Energy, Inc. (D)

American Electric Power Company, Inc. (AEP)

Five for Friday

Five for Friday uses stock screens to produce five stocks that we expect will outperform if a particular investment theme plays out in the future. Investment themes may be relevant to the current or expected market, industry and/or economic trends. Investment themes may not always represent our current forecast. 

Disclosure

This report is not a recommendation to buy or sell the named securities. We intend to elicit ideas about stocks meeting specific criteria and investment themes. Please read our disclosures carefully and do your own research before investing.