The 10 most overbought and oversold ASX 200 stocks – Week 28
The ASX 200 has reached new all-time highs, pushing stocks across various sectors into overbought territory.
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Mentioned
KEY POINTS
- The ASX 200 has reached new all-time highs, pushing stocks across various sectors into overbought territory based on the Relative Strength Index (RSI)
- Aristocrat Leisure, Pinnacle Investment Management, and gold miners are among the most overbought stocks, driven by strong company-specific fundamentals and market trends
- Several stocks, including NIB Holdings and IDP Education, are oversold despite the bullish market, indicating significant underlying issues in these companies or sectors
The ASX 200's climb to fresh all-time highs has propelled stocks across diverse sectors – from gold to travel, asset management to industrials – 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, Aristocrat Leisure is the most overbought stock on the ASX 200 with an RSI of 79.
Most Overbought ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Aristocrat Leisure | 79 | 13.3% | $52.92 | $50.28 | -5.0% | |
Pinnacle Investment Management | 78 | 15.7% | $15.44 | $13.98 | -9.5% | |
Perseus Mining | 75 | 15.7% | $2.73 | $2.88 | 5.5% | |
Flight Centre Travel | 74 | 13.9% | $21.95 | $23.05 | 5.0% | |
Altium | 73 | 0.8% | $68.26 | $61.61 | -9.7% | |
Domain | 73 | 10.5% | $3.26 | $3.48 | 6.7% | |
Washington H Soul Pattinson | 73 | 6.6% | $34.48 | $35.60 | 3.2% | |
Newmont Corporation | 72 | 13.7% | $69.50 | na | na | |
Telstra Group | 72 | 8.2% | $3.82 | $4.12 | 7.9% | |
Ventia Services | 72 | 11.8% | $4.16 | $3.86 | -7.2% |
Target price' is an aggregate of broker target prices from Refinitiv. Data as of the close on Friday, 12 July 2024
The current market is exceptionally bullish, with overbought stocks often maintaining their momentum longer than expected. This strength is driven by strong trends in company-specific fundamentals including:
Aristocrat Leisure's recent Investor Day showcased ambitious plans for its new Interactive Division, projecting US$1 billion in revenue by FY29 with a five-year CAGR exceeding 20%. This optimistic outlook resonated with analysts, prompting Citi to upgrade FY24-26 earnings forecasts by 3-8% and raise its target price from $53 to $59.
Pinnacle Investment Management has seen twelve consecutive weeks of share price gains, buoyed by a bullish equity market that typically boosts key asset manager metrics like funds under management and performance fees. During February reporting season, Pinnacle reported $4.5 billion in net inflows for the first-half compared to Macquarie expectations of just $0.7 billion.
Gold miners are trending higher following a sharp 2% spike in bullion prices last Thursday to US$2,415 an ounce, triggered by cooler-than-expected US inflation data. The sector is poised for significant cash flow improvements as capex commitments peak and gold prices break out, signaling a potentially lucrative period for gold mining companies.
Most Oversold ASX 200 Stocks
Ticker | Company | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
NIB Holdings | 35 | -5.7% | $6.94 | $8.09 | 16.6% | |
APA Group | 39 | -5.0% | $7.96 | $8.93 | 12.2% | |
IDP Education | 39 | -5.9% | $14.22 | $18.65 | 31.2% | |
Pilbara Minerals | 40 | -7.8% | $3.06 | $3.60 | 17.6% | |
Seek | 40 | -11.3% | $20.72 | $27.51 | 32.8% | |
Audinate Group | 41 | -7.5% | $15.33 | $19.77 | 29.0% | |
Deterra Royalties | 41 | -9.0% | $4.06 | $4.69 | 15.5% | |
Seven Group | 41 | -9.0% | $36.00 | $41.04 | 14.0% | |
Alumina | 42 | -1.2% | $1.64 | $1.48 | -9.8% | |
EVT Limited | 42 | 0.5% | $11.20 | $13.27 | 18.5% |
Target price' is an aggregate of broker target prices from Refinitiv. Data as of the close on Friday, 12 July 2024
If a company or sector is struggling while the broader market is breaking new ground, it often signals significant underlying issues. For the stocks above, a few problems may be at play, including:
NIB's international inbound health insurance segment generated approximately 17% of Group earnings pre-COVID, according to Macquarie. The data surrounding visas has been relatively mixed, with the the Department of Home Affairs reporting a 16% drop in student visas for the March quarter 2024, offset by a 20% rise in work visas.
IDP Education has faced numerous regulatory headwinds across Australia, Canada and the UK. Last month, Macquarie cut its FY24, 25 and 26 EPS outlook by 18%, 38% and 42% respectively, reflecting regulatory changes in main destination markets and softer volumes as a result.
Pilbara Minerals briefly hit $2.89 last week, the lowest level since August 2022. Citi analysts expect lithium prices to trade sideways to lower over the next 3-6 months until supply cuts rebalance the market.
