The 10 most overbought and oversold ASX 200 stocks – Week 13

Takeover chatter is swirling in the market and Virgin Money (ASX: VUK) is likely the next potential departure from the ASX after receiving a $5.7 billion offer from Britain's largest building society.

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 (set to be acquired by France's Saint-Gobain at $9.00 cash per share) is the most overbought stock on the ASX 200 with an RSI of 84.

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Most Overbought ASX 200 Stocks

'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 15 March 2024 close

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Takeover candidates aside, Webjet (ASX: WEB) shares soared 9.2% to a fresh four-year high last Thursday, after its WebBeds Investor Day Presentation revealed a bullish stance on the company's TTV (total transaction volume) growth. The key numbers included:

• On track to deliver approximately $4 billion in TTV this year

• On track to deliver $5 billion in TTV in FY25

• Reiterates $10 billion TTV target at 50% EBITDA margin by FY30

• Wholesale market forecast to grow at a compound annual growth rate of 7.7% over the next five years

• Absence of M&A chatter also hints at a strong organic trajectory

"Webjet presented a detailed strategy, providing more colour about the pathway to $10 billion [TTV]. The US and APAC are the main opportunities for new customer wins, while conversion of existing traffic should be a material contributor as well," Citi analyst said in a note dated 21 March.

"Nearer term, macro should continue to assist with hotel prices and nights per transaction now both increasing simultaneously." The note retained a BUY rating with a $9.90 target price (from $7.90).

Webjet shares are up another 2.1% in early trade on Monday to $8.93.

Webjet 12-month price chart (Source: Market Index)

The oversold stocks list is largely populated by reporting season losers – Companies that reported first-half FY24 results that fell short of analyst expectations, experienced significant sell-offs on results day and have since continued to spiral lower.

In the past 16 reporting seasons, the stocks that missed analyst expectations have closed down 6.3% on reporting day and down a further 8.4% four months later, according to the Coppo Report.

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Most Oversold ASX 200 Stocks