Data Insights

The 10 most overbought and oversold ASX 200 stocks – Week 27

Mon 08 Jul 24, 10:55am (AEST)
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Asset managers and coal stocks surged into overbought territory last week, while popular tech companies such as Seek and Megaport plummeted towards extreme oversold levels.

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, Magellan Financial Group is the most overbought stock on the ASX 200 with an RSI of 75.

Most Overbought ASX 200 Stocks

Ticker

Company

RSI

1-Month %

Close Price

Target price

Upside

MFG

Magellan Financial

75

13.9%

$9.50

$8.94

-5.9%

WHC

Whitehaven Coal

75

11.9%

$8.97

$8.99

0.2%

SMR

Stanmore Resources

74

16.8%

$3.97

$4.01

1.0%

ALL

Aristocrat Leisure

74

10.9%

$50.96

$50.28

-1.3%

ALU

Altium

72

1.8%

$68.18

$61.80

-9.4%

FLT

Flight Centre

71

12.2%

$21.50

$23.05

7.2%

STO

Santos

69

6.5%

$7.99

$8.12

1.6%

SDF

Steadfast Group

68

12.6%

$6.19

$6.59

6.5%

CSL

CSL

68

4.9%

$299.75

$317.37

5.9%

WDS

Woodside

67

7.8%

$29.26

$30.87

5.5%

Target price' is an aggregate of broker target prices from Refinitiv. Data as of the close on Friday, 5 July 2024

Magellan's shares surged approximately 13% last week, primarily driven by Thursday's update on funds under management and performance fees. The report revealed a minor decrease in total funds under management, which dipped to $36.6 billion as of June 30, 2024, down from $36.7 billion in the previous month. In addition, Magellan guided to approximately $19 million in performance fees for FY24. To add some perspective, Macquarie analysts were previously (April 2024) forecasting performance fees of $6.6 million for FY24.

The better-than-expected performance fees suggest the fund is performing relatively well, which could be a positive indicator for future updates and earnings. However, Macquarie maintained its Underperform rating and $8.20 target price the day following the announcement.

Macquarie analysts commented, 'We believe it's premature to take a more positive stance, given the early stage of the turnaround. With the Funds Management business trading at approximately 11.1 times FY25 earnings, the market appears to be pricing in a recovery. However, investment performance hasn't improved sufficiently to drive a rebound in fund flows.'"

Most Oversold ASX 200 Stocks

Ticker

Company

RSI

1-Month %

Close Price

Target price

Upside

SEK

Seek

25

-14.8%

$20.26

$27.51

35.8%

MP1

Megaport

25

-14.8%

$11.14

$15.53

39.4%

APA

APA Group

30

-6.6%

$7.91

$8.93

12.9%

PLS

Pilbara Minerals

31

-19.1%

$3.00

$3.60

20.0%

AMC

Amcor

31

-6.5%

$14.36

~

~

NST

Northern Star Resources

32

-10.7%

$12.82

$16.43

28.2%

DMP

Domino's Pizza

33

-11.1%

$34.71

$43.41

25.1%

NHF

NIB

33

-6.4%

$6.98

$8.09

15.9%

RWC

Reliance Worldwide

33

-9.7%

$4.39

$5.50

25.3%

KLS

Kelsian Group

34

-7.9%

$4.80

$7.11

48.1%

Target price' is an aggregate of broker target prices from Refinitiv. Data as of the close on Friday, 5 July 2024

Seek hasn't been this oversold since March 2020, despite no market-sensitive announcements since its half-year FY24 results on February 13. The reason for the stock's aggressive unraveling becomes clear when examining current Australian jobs data. Recent indicators paint a rather bearish picture:

  • ANZ-Indeed Australian job ads declined 2.2% month-on-month in June, marking a fifth consecutive monthly decline. While the level of job ads is still 17.8% higher than pre-COVID levels, the trend is quite clear.

  • Total job vacancies in Australia were 352,600 in May 2024, according to the ABS. This represents a 2.7% decline from February 2024 and 16.4% decline compared to last year

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Source: ANZ-Indeed Australian Job Ads

Megaport has undergone an unexpected selloff, bucking the trend of AI-related outperformance. Since late May, the stock has plummeted nearly 30%, now trading at its lowest ever daily RSI. This decline comes despite no market-sensitive announcements since the company's operational update on April 29.

In response to that update, Citi analysts noted: "The softer-than-expected Q3, particularly in leading metrics like customers and ports, has led us to revise our FY25 EBITDA forecast down by 6% and our target price by 4% to $16.05."

"While the turnaround is taking longer than expected, we reiterate our Buy call given our investment thesis remains intact as we expect Megaport to benefit from structural drivers of hybrid and multi cloud and expect the rebuild of the go to market team to deliver results."

Interestingly, Megaport's stock underperformance coincides with a significant divestment by Founder Bevan Slattery. On May 23, Mr. Slattery sold 1.1 million shares at $14.52 each, representing about 16.6% of his overall holdings. This marks his first on-market trade since February 2020.

After this transaction, Slattery retains ownership of 5.0 million shares.

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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