The 10 most overbought ASX 200 stocks – Week 10

The playbook for reporting season winners typically unfolds like this – First, the company delivers a stronger-than-expected set of numbers, the stock opens the session higher and closes even higher. Following this, the company receives a flurry of broker upgrades, positive media coverage and a continued surge in sentiment, propelling the share price further into the stratosphere. This week's overbought stocks list will feature several reporting season winners, including heavyweight names like Goodman Group (ASX: GMG) and Westpac (ASX: WBC).

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, CSR is the most overbought stock on the ASX 200, with an RSI of 86.

Most Overbought ASX 200 Stocks

'Target price' is an aggregate of broker target prices from Refinitiv. Data of Friday, 1 March 2024 close

CSR is the most overbought stock on the ASX 200 thanks to a takeover offer from France's Saint-Gobain. The two companies have entered into a definitive agreement at a price of $9.00 cash per share. The agreed-upon price represents a premium of 33% above the volume-weighted average price before the takeover announcement.

Life360 experienced an extraordinary 38.5% rally last Friday after reporting full-year (calendar year 2023) revenue growth of 35%, to $305 million, positive adjusted EBITDA of $20.6 million and a net loss of $28.2 million. While these numbers might not appear amazing at face value, they were:

• Net loss was 24% better than Goldman Sachs forecasts

• Adjusted EBITDA was 29.6% ahead of Goldman forecasts and above the company's guidance of $12-16 million

Life360 12-month price chart (Source: Market Index)

Ventia Services is an infrastructure services company that operates in Australia and New Zealand. It provides a wide range of services such as construction, maintenance and engineering across sectors, including telecommunications, transport and utilities. The company's full-year results for the year ended 31 December 2023 broadly beat market expectations, including:

• Revenue up 9.8% to $5.67 billion

• NPATA up 12.5% to $202.1 million

• Work in hand of $18.1 billion

• Final dividend of 9.41 cents per share

• Guidance for FY24 of NPATA growth between 7-10%

The NPATA (which excludes the amortisation of intangible assets) figure was 2% above Macquarie's expectations. The analysts said the company "continues to build a track record of earnings delivery aided by defensive, essential services revenues and a strong risk management and cost focus."

"Despite a strong recent run (+12% CYTD vs All Ords flat), VNT's 13.5x FY24e PE is not demanding ... The stock is trading at an attractive 9% free cash flow yield supported by consistent cash flow and its capital-light business model."

The stock finished the results session (21 Feb) up 4.5% and rallied another 11% over the next seven sessions.

Ventia Services 12-month price chart (Source: Market Index)