The 10 most overbought and oversold ASX 200 stocks – Week 45
Inghams is the most overbought stock on the ASX 200 after last week's massive 1H24 earnings upgrade.
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Mentioned
KEY POINTS
- Inghams is the most overbought stock on the ASX 200 after announcing a massive earnings upgrade for 1H24
- Inghams is in the midst of an earnings upgrade cycle as consumers opt for more chicken and less red meat
- The same names continue to appear on the oversold stocks list, including Liontown Resources, Credit Corp and AMP
Chicken nuggets anyone? Shares in Inghams (ASX: ING) rallies 17.7% last week after an unexpectedly positive earnings upgrade for the first-half of FY24. The company said it expects underlying net profit to come in at approximately $71.0 million compared to analyst expectations of just $42.9 million.
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, Inghams is the most overbought stock with an RSI of 83.
The Most Overbought Stocks
Ticker | Name | RSI | 1-Month % | Last close | Target price | Upside |
|---|---|---|---|---|---|---|
Inghams Group | 83 | 18.4% | $3.92 | $3.95 | 0.8% | |
Champion Iron | 82 | 31.8% | $7.83 | $7.70 | -1.7% | |
Fortescue Metals | 71 | 11.8% | $23.23 | $18.44 | -20.6% | |
Super Retail Group | 69 | 15.2% | $13.31 | $13.03 | -2.1% | |
Rio Tinto | 68 | 9.6% | $122.60 | $122.94 | 0.3% | |
Regis Resources | 65 | 15.5% | $1.75 | $1.88 | 7.4% | |
Silver Lake Resources | 65 | 22.0% | $1.06 | $1.58 | 49.8% | |
Qube Holdings | 65 | 3.6% | $2.90 | $3.47 | 19.7% | |
Lifestyle Communities | 65 | 6.3% | $16.80 | $19.19 | 14.2% | |
Seven Group | 65 | 1.9% | $29.25 | $30.91 | 5.7% |
'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 3 November 2023 close.
Inghams is in the midst of an earnings upgrade cycle as consumers opt for more chicken and less red meat. Here's a recap of recent developments:
August reporting season: Inghams smashed FY23 earnings expectations, with underlying net profit up 67.7% to $71.1 million (vs. $58.0 million expected). This reflected the successful roll out of price hikes to offset persistent cost inflation across feed, fuel and freight.
Share price response: Ingham shares rallied almost 30% between 16 and 30 August. The stock did not pull back sharply either, with a drawdown of no more than 9% from the 30 August high.
Broker response: Most brokers noted further catalysts ahead including further prices increases in FY24, tight supply and robust demand. The average price target across 11 ratings increased 11.2% to $3.54 after the company's FY23 results
1H24 trading update: Most metrics in the trading update were running well-ahead of consensus expectations. Management attribute the strong performance to: Continued improvement in operational performance, strong demand for poultry, further improvements in wholesale pricing and an accelerated recovery in New Zealand.
Inghams experienced a 7.9% jump on the day of the announcement – Tuesday, 31 October – and rallied an additional 6.5% in the three days that followed. This might reflect the sheer magnitude of the earnings upgrade (plus positive broker comments).
Inghams daily chart (Source: TradingView)
The Most Oversold Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Liontown Resources | 18 | -44.1% | $1.66 | $2.11 | 27.5% | |
Credit Corp Group | 24 | -32.3% | $12.41 | $17.93 | 44.5% | |
Origin Energy | 25 | -3.2% | $8.38 | $9.26 | 10.5% | |
AMP | 28 | -13.3% | $1.05 | $1.15 | 10.0% | |
New Hope Corp | 29 | -12.6% | $5.43 | $4.91 | -9.6% | |
IGO | 29 | -16.3% | $9.69 | $12.46 | 28.6% | |
Healius | 32 | -13.5% | $1.90 | $2.83 | 49.3% | |
Orora | 33 | -9.1% | $2.49 | $3.28 | 31.7% | |
Treasury Wine Estates | 34 | -6.2% | $11.04 | $13.07 | 18.4% | |
Allkem | 34 | -13.4% | $9.54 | $14.49 | 51.9% |
'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 3 November 2023 close.
The oversold stocks list continues to reiterate the same theme – The market does not have much dip buying appetite, especially for stocks that have had to raise large amounts of capital or reported unexpectedly weak earnings.
Here's a recap of the main suspects and the selloff catalyst/date:
Orora (6 Sept opened 12.4% lower after raising $450 million at $2.70 per share or a 14.5% discount to its last close
AMP (18 Oct) sold off around 7% in the three days after a guidance downgrade
Credit Corp (18 Oct) tumbled 31% after flagging a substantial impairment
Liontown (20 Oct) sold off 31.9% after raising $365 million at $1.80 per share or a 35.5% discount to its last close
