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Data Insights
The 10 most overbought and oversold ASX 200 stocks – Week 36
By
Kerry Sun
Mon 11 Sep 23, 2:13pm (AEDT)
Source: iStock
Stocks in article
Key Points
- Reporting season winners are the most overbought stocks on the ASX 200
- The most overbought stock is Johns Lyng Group with an RSI of 76
- Names like Orora, ResMed, Chalice Mining and Qantas continue to sit in oversold territory
The market's showing a lot of love for reporting season winners like Johns Lyng Group, Brambles and Hub24. These stocks rallied at least 10% post-earnings and seem relatively immune to recent market volatility, making them the most overbought stocks on the ASX 200 this week.
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, Johns Lyng Group is the most overbought stock with an RSI of 76.
Most Overbought Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Johns Lyng Group | 76 | 17.6% | $6.48 | $7.36 | 13.6% | |
Seven Group | 73 | 9.0% | $28.63 | $30.24 | 5.6% | |
Brambles | 72 | 6.9% | $15.12 | $16.05 | 6.2% | |
Hub24 | 72 | 16.4% | $32.66 | $33.68 | 3.1% | |
Goodman Group | 71 | 14.4% | $23.19 | $24.54 | 5.8% | |
Carsales.Com | 71 | 16.7% | $28.81 | $27.65 | -4.0% | |
Cochlear | 69 | 14.5% | $269.29 | $240.40 | -10.7% | |
United Malt Group | 69 | 2.9% | $4.93 | $4.81 | -2.4% | |
Brickworks | 69 | 8.1% | $27.72 | $26.61 | -4.0% | |
Computershare | 68 | 4.2% | $25.78 | $27.40 | 6.3% |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at 8 September 2023 close. (Table: Market Index | Source: Refinitiv)
The reporting season winner playbook: There seem to be a pretty straightforward recipe for recent Overbought stocks.
Step 1: Announce stronger-than-expected FY23 results and/or FY24 guidance
Step 2: Stock rallies 5-15% on earnings
Step 3: Most stocks grind 3-5% over the next couple of days and/or weeks
The stocks have all held up relatively well despite the ASX 200 falling around 2.2% in the last five sessions.
Johns Lyng Group 3-month chart (Source: Market Index)
Seven Group 3-month chart (Source: Market Index)
Brambles 3-month chart (Source: Market Index)
The Oversold stocks list continues to see some regulars including ResMed, Chalice Mining, Qantas, Coles, Alumina and Cromwell Property Group. As we noted in previously, a lot of stocks that end up with sub-30 RSIs tend to remain oversold for quite some time.
Most Oversold Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Orora | 14 | -21.3% | $2.69 | $3.37 | 25.3% | |
Resmed Inc | 17 | -14.1% | $23.45 | na | na | |
Chalice Mining | 20 | -43.7% | $3.11 | $6.40 | 105.8% | |
Qantas Airways | 21 | -14.8% | $5.54 | $8.27 | 49.3% | |
Cromwell Property Group | 21 | -17.1% | $0.44 | $0.74 | 70.1% | |
Core Lithium | 22 | -33.6% | $0.39 | $0.53 | 37.7% | |
Alumina | 23 | -27.3% | $1.01 | $1.22 | 20.8% | |
Coles | 23 | -12.5% | $15.75 | $17.04 | 8.2% | |
The Lottery Corp | 23 | -9.0% | $4.83 | $5.42 | 12.2% | |
Bega Cheese | 24 | -15.2% | $2.78 | $3.50 | 25.9% |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at 1 September 2023 close. (Table: Market Index | Source: Refinitiv)
A closer look at Orora: Orora shares fell 18% last week after raising $1.345bn at a 21.3% discount to its last close ($3.43 as at Friday, 25 August), a sizeable raise relative to its $2.3bn market cap. The proceeds will be used to acquire Saverglass, which management expects mid-single-digit EPS accretion within the first year.
"We think the deal is fair but view it as adding a third standalone asset rather than a complement to the existing operations," Morgan Stanley said in a note last week.
Orora 12-month price chart (Source: Market Index)
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