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.

Most Overbought ASX 200 Stocks

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

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.

Most Oversold ASX 200 Stocks