The 10 most overbought and oversold ASX 200 stocks – Week 42
United Malt Group lands itself as the most overbought stock on the ASX 200 this week.
Mentioned
KEY POINTS
- United Malt Groupis the most overbought stock on the ASX 200 this week with an RSI of 77
- UMG's share price has risen steadily since the initial takeover offer in March and is set to be suspended from trading on Tuesday, 17 October
- Magellan is the most oversold stock on the ASX 200 for two weeks running and the overall outlook for the company remains pessimistic
Shares in United Malt Group (ASX: UMG) have experienced three major rallies since Malteries Soufflet's initial takeover offer back in March. The rise in share price with minimal price corrections makes it the most overbought stock 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, United Malt Group is the most overbought stock with an RSI of 77.
The Most Overbought Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
United Malt Group | 77 | 1.0% | $4.98 | $4.81 | -3.4% | |
Ramelius Resources | 77 | 25.4% | $1.73 | $1.72 | -0.6% | |
Origin Energy | 76 | 7.4% | $9.28 | $8.45 | -8.9% | |
Spark New Zealand | 69 | 5.7% | $4.67 | $4.81 | 3.0% | |
News Corp | 67 | 3.8% | $34.18 | na | na | |
Newcrest Mining | 66 | 3.7% | $27.07 | $28.68 | 6.0% | |
Deterra Royalties | 66 | 2.0% | $4.95 | $4.77 | -3.5% | |
Gold Road Resources | 66 | 5.1% | $1.82 | $1.93 | 6.2% | |
Pro Medicus | 64 | 12.1% | $82.21 | $74.75 | -9.1% | |
Silver Lake Resources | 63 | 2.9% | $0.99 | $1.54 | 55.9% |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at 16 October 2023. (Table: Market Index | Source: Refinitiv)
To recap UMG's key share price moves over the past couple of months:
28 March: +30.8% to $4.50 after receiving an indicative proposal at $5.00 cash per share or a 45.3% premium to its last closing price
3 July: +8.6% to $4.78 after UMG signed the Scheme Implementation Deed
14 August: +2.5% to $4.91 after the transaction was cleared by the UK Competition and Markets Authority
As UMG overcame each obstacle in the takeover process, its share price steadily approached the $5.00 per share takeover offer. UMG shares closed at $4.97 on Monday and set to be suspended from close of trading on Tuesday, 17 October.
UMG 12-month chart (Source: Market Index)
Light & Wonder (ASX: LNW) will replace UMG in the ASX 200 Index.
The Most Oversold Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Magellan Financial | 23 | -29.5% | $6.68 | $9.33 | 39.7% | |
Chalice Mining | 27 | -30.9% | $2.04 | $3.55 | 74.0% | |
Bluescope Steel | 28 | -7.3% | $18.18 | $22.77 | 25.2% | |
Orora | 29 | -7.9% | $2.57 | $3.31 | 28.8% | |
AMP | 29 | -11.7% | $1.15 | $1.21 | 4.9% | |
Qantas | 30 | -12.5% | $4.91 | $7.69 | 56.6% | |
TPG Telecom | 30 | -9.2% | $5.13 | $5.90 | 15.0% | |
The Star Entertainment | 31 | -22.8% | $0.61 | $0.93 | 52.5% | |
Credit Corp | 31 | -16.4% | $17.69 | $22.83 | 29.1% | |
Lendlease Group | 32 | -11.0% | $6.64 | $8.47 | 27.6% |
Magellan (ASX: MFG) retained its position as the most oversold stock on the ASX 200 for two weeks running and showing little recovery even after the 19% plunge on Friday, October 6.
Magellan 12-month price chart (Source: Market Index)
The overall outlook for Magellan remains pessimistic, with the latest note from Goldman Sachs retaining a Neutral rating with a $7.55 target price. Some of its key takeaways include:
"MFG announced that its FUM as at end Sep-23 quarter was $35bn (down from $39.7bn at Jun-23) v GSe of $35.4bn at the end of 1H24 (Dec-23, as we forecast half-yearly) suggesting weaker trends than what we were forecasting."
"While the flows were slightly worse than what we were forecasting, institutional flows were very weak in Sep-23."
"Global equities continues to be weak v benchmarks: Performance on a 1 year / 3 year / 5 year and 10 year basis were all weaker than benchmarks."
"We downgrade earnings by 15% into FY25."
The oversold stocks list continues to feature a few names from last week like The Star Entertainment, Qantas and Credit Corp – A reminder of the market's current intolerance for companies that fail to meet expectations.
