The 10 most overbought and oversold ASX 200 stocks – Week 12
Real Estate, Financials and takeover candidates dominate the Overbought stocks list this week.
Source: Shutterstock
Mentioned
KEY POINTS
- S&P/ASX 200 Real Estate sector surged over 30% since late October, driven by falling inflation, robust economic data, and rising rate cut expectations
- CSR emerges as the most overbought stock with an RSI of 85, following a $9.00 cash per share takeover bid
- Macquarie analysts anticipate real estate fund under management to decline to $64.6 billion by FY24's second half, rebounding in FY25 and FY26
The S&P/ASX 200 Real Estate sector is up more than 30% since late October, buoyed by favourable headwinds such as falling inflation, solid economic data and mounting rate cut expectations. This resurgence has propelled several names in the sector into overbought territory.
The 14-day Relative Strength Index is a momentum indicator that measures the magnitude and speed of recent price changes to assess whether or not a stock is overbought or oversold.
An RSI of 70 or above is considered to be overbought, which means the stock is rising too quickly and likely to experience a pullback. Meanwhile, an RSI of 30 or below is considered to be oversold, which means the stock is falling too quickly and is likely to experience a rebound.
Based on this indicator, CSR is the most overbought stock on the ASX 200 with an RSI of 85.
Most Overbought ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
CSR | 85 | 32.0% | $8.82 | $7.17 | -18.7% | |
Virgin Money | 82 | 32.0% | $4.04 | na | na | |
Centuria Industrial Reit | 78 | 5.6% | $3.57 | $3.57 | 0.0% | |
HMC Capital | 77 | 13.7% | $7.29 | $6.69 | -8.2% | |
Netwealth Group | 75 | 13.2% | $20.38 | $17.99 | -11.7% | |
Altium | 75 | -1.4% | $65.05 | $62.24 | -4.3% | |
Ventia Services | 72 | 17.4% | $3.85 | $3.86 | 0.3% | |
NextDC | 72 | 19.3% | $17.44 | $18.94 | 8.6% | |
Scentre Group | 71 | 9.5% | $3.34 | $3.23 | -3.3% | |
Charter Hall | 71 | 8.9% | $13.46 | $13.13 | -2.5% |
'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 15 March 2024 close
CSR has been sitting in overbought territory since late February, after it received a $9.00 cash per share takeover bid from France's Saint Gobain. The CSR Board unanimously recommends voting in favour, in absence of a superior proposal and subject to fair and reasonable assessment.
"While the offer is subject to customary regulatory and shareholder approvals, we think it is likely to proceed," Macquarie analysts said in a note dated 26 February.
CSR 12-month price chart (Source: Market Index)
Real Estate stocks have soared in response to falling yields, with the Australian 10-year government bond yield down 82 bps since 31 October 2023. Macquarie analysts believe operational metrics (e.g. operating earnings per share) is either at or approaching cyclical lows, with FY24 being the trough earnings year.
Real estate funds under management declined approximately $4 billion in the first-half of FY24 to $67.7 billion, largely driven by devaluations. Macquarie expects ongoing devaluations and soft transaction volumes to drive FUM to $64.6 billion by the second-half of FY24. But rebound 14% and 16% in FY25 and FY26 respectively, underpinned by a recovery in transaction volumes and sentiment in real estate.
Source: Macquarie Research
Iron ore and coal stocks dominate the oversold stocks list – Both commodities have sold off sharply in recent weeks amid lackluster Chinese economic data, underwhelming demand and growing supply. A Macquarie note dated 15 March had an Underweight view on both iron ore and thermal coal, reflecting:
Iron ore: Reaffirmed long-term iron ore price target of US$80 a tonne amid faster ramp-up of Rio Tinto's Simandou. This project is expected to push marginal tonnes out of the market, bringing forwards large market surplus from 2025 onwards.
Thermal coal: Also reaffirmed long-term price targets of US$80 a tonne due to persistent surpluses and structural headwinds to seaborne demand growth.
Most Oversold ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
TPG Telecom | 22 | -15.8% | $4.52 | $5.15 | 13.9% | |
Spark New Zealand | 27 | -5.8% | $4.55 | $4.66 | 2.4% | |
Fortescue | 27 | -14.7% | $23.96 | $22.05 | -8.0% | |
Whitehaven Coal | 27 | -9.8% | $6.39 | $8.01 | 25.4% | |
Sims | 29 | -16.9% | $11.80 | $13.58 | 15.1% | |
Inghams | 30 | -20.4% | $3.44 | $4.11 | 19.5% | |
Coronado Global | 31 | -16.2% | $1.22 | $2.02 | 65.6% | |
Helia Group | 33 | -22.1% | $3.64 | $4.09 | 12.4% | |
IPH | 33 | -12.2% | $6.20 | $9.14 | 47.4% | |
Champion Iron | 34 | -12.3% | $7.14 | $8.96 | 25.5% |
'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 15 March 2024 close
