The 10 most overbought ASX 200 stocks – Week 10
Plenty of reporting season winners are popping up in the overbought stocks list.
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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
Ticker | Company | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
CSR Limited | 86 | 28.2% | $8.83 | $7.17 | -18.8% | |
Life360 Inc | 85 | 48.9% | $11.30 | $11.93 | 5.6% | |
Goodman Group | 82 | 20.0% | $30.48 | $31.03 | 1.8% | |
Ventia Services | 81 | 18.8% | $3.80 | $3.82 | 0.5% | |
Treasury Wine Estates | 81 | 14.3% | $12.35 | $13.10 | 6.1% | |
Westpac | 81 | 11.1% | $26.41 | $22.71 | -14.0% | |
Altium | 80 | 31.5% | $65.20 | $63.06 | -3.3% | |
ARB Corporation | 80 | 23.5% | $41.37 | $38.03 | -8.1% | |
Reliance Worldwide | 80 | 32.9% | $5.54 | $5.23 | -5.6% | |
Lovisa | 79 | 42.1% | $31.97 | $28.45 | -11.0% |
'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)
