The 10 most overbought and oversold ASX 200 stocks – Week 44
Champion Iron is the most overbought stock on the ASX 200 this week, with an RSI of 70.
Source: iStock
Mentioned
KEY POINTS
- Champion Iron is the most overbought stock on the ASX 200, with an RSI of 70
- Champion Iron produces high-grade iron ore, which has fewer impurities and requires less raw material
- Investors are hesitant to buy the dip, as share prices have been grinding sideways or lower following substantial selloffs
Champion Iron (ASX: CIA) is reaping the benefits of its high-grade iron ore, which has fewer impurities, requires less raw material for the same amount of steel and reduces energy consumption and emissions. After rallying 11% to a fresh 6-month high last week, Champion Iron has landed the spot as the most overbought stock on the ASX 200.
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, Champion Iron is the most overbought stock with an RSI of 70.
The Most Overbought Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Champion Iron | 70 | 14.1% | $6.94 | $7.70 | 11.0% | |
Super Retail Group | 68 | 7.4% | $12.85 | $13.03 | 1.4% | |
Whitehaven Coal | 68 | 5.0% | $7.72 | $8.14 | 5.4% | |
Silver Lake Resources | 66 | 28.8% | $1.05 | $1.58 | 50.5% | |
Gold Road Resources | 66 | 17.8% | $1.89 | $2.01 | 6.3% | |
Fortescue Metals | 63 | 7.7% | $22.25 | $18.73 | -15.8% | |
Regis Resources | 63 | 18.6% | $1.72 | $1.88 | 9.3% | |
Northern Star | 63 | 17.5% | $12.04 | $13.24 | 10.0% | |
Origin Energy | 63 | 4.3% | $9.21 | $9.26 | 0.5% | |
Ramelius Resources | 63 | 21.6% | $1.72 | $1.71 | -0.3% |
'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 27 October 2023 close.
Not all iron ore is made equal: Champion Iron produced an iron ore concentrate with grades of 66.1% in the September quarter, which achieved an average sales price of US$169.4 a tonne. In the same period, Fortescue's iron ore received an average US$100 a tonne which realised 87% of the average Platts 62% CFR Index.
The company reported its September quarter report last Thursday, which was well-received by brokers.
Citi: Production was in-line but shipments fell short due to ongoing rail constraints. Target price unchanged at $8.70 with a Buy rating. Bullish on longer-term trends such as demand for high-grade iron ore.
Macquarie: Record production but sales was a little lower than forecast due to Canadian wildfires. EBITDA was stronger-than-expected due to higher realised prices and lower costs. Outperform rating maintained with a $7.80 target price.
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Champion Iron 12-month price chart (Source: Market Index)
The Most Oversold Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Liontown Resources | 10 | -43.3% | $1.69 | $2.11 | 24.9% | |
AMP | 16 | -19.1% | $1.02 | $1.15 | 12.7% | |
Credit Corp | 18 | -37.1% | $12.02 | $17.93 | 49.2% | |
Tabcorp | 18 | -19.2% | $0.78 | $1.10 | 41.0% | |
Pinnacle Investment | 18 | -14.0% | $7.64 | $10.50 | 37.4% | |
Mirvac Group | 20 | -12.8% | $1.88 | $2.25 | 20.0% | |
Healius | 20 | -22.3% | $1.84 | $2.83 | 54.2% | |
Bapcor | 21 | -20.4% | $5.40 | $6.83 | 26.5% | |
Netwealth | 21 | -17.2% | $12.41 | $14.32 | 15.4% | |
Webjet | 21 | -10.5% | $5.97 | $8.18 | 37.0% |
'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 27 October 2023 close.
The oversold stocks list continues to reiterate a rather persistent theme – Once the stock ends up here, it typically has a hard time getting out. The main suspects include:
Liontown shares tumbled 31.9% on 20 October after raising $365 million at $1.80 per share or a 35.5% discount to its last close. The stock opened at $1.65 on Monday, 30 October (down another ~9%).
AMP shares fell around 7% in the three days following its guidance downgrade on 18 October. The drop has widened to around 12% as of Monday, 30 October.
Credit Corp shares fell around 31% on 18 October after it flagged a savage impairment to the carrying value of its US-purchased debt assets. The company expects FY24 statutory net profit to be down around 56% year-on-year. The stock is currently trading around the same levels at 18 October.
What does the data tell us: Investors continue to remain hesitant on buying the dip. Share prices have had the tendency to grind sideways if not lower following earnings downgrades or downbeat trading updates.
