10 Oversold Blue Chip Stocks To Buy

Published on August 5, 2023 at 2:04 pm by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at 10 oversold blue chip stocks to buy. To skip our detailed analysis of current market conditions, you can go directly to see the 5 Oversold Blue Chip Stocks To Buy.

The markets have been full of surprises so far this year. With rampant inflation and recession concerns, investors expected to see more of a market slowdown in the first half of 2023. Instead, they got hit with a multi-month stock rally, led primarily by large-cap technology stocks piggybacking off of the artificial intelligence boom. At the same time, the Federal Reserve first skipped a rate hike in June, offering some breathing room for the economy. This move was followed by a July rate hike. Throughout this all, the US also narrowly avoided a debt-ceiling crisis, while the global community has been facing rising geopolitical tensions, drastically increased energy and oil prices, and much more.

Stock Performance In August

With this backdrop in mind, the current market conditions we are seeing are not all too surprising. Some of the stocks that have continued to perform well in this economy primarily include reliable blue chip names, such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and The Procter & Gamble Company (NYSE:PG), among several others. At the same time, other companies are also continuing to pull their weight in an effort not to be left in the dust by the competition. However, even the companies that have been doing well have begun to face a slowdown come August. On August 2, for instance, many of the top S&P 500 performers were down by an average of 3%, according to CNBC’s Closing Bell for the day.

In the face of all this, investors may be worried about where to put their money when no place really gives them a certainty of profit. However, at a time when the economy is slowing down, it becomes increasingly important to note where one can find better investment opportunities, even among beaten-down stocks. In this context, looking at stocks that are traditionally considered to be oversold may make for a smart investment strategy. Chris Grisanti, the Chief Equity Strategist and Senior Portfolio Manager at MAI Capital Management, said something along similar lines in a CNBC interview from April. Here are some of his comments:

“It’s a really tough market. I do think the economy is like a car speeding down a cul-de-sac with really no place to go. Things are really, I think, set to slow down over the summer. So what we think, instead of buying broadly or expecting growth in the usual areas, let’s find the good companies that have already gotten the stuffing knocked out of them.”

Are Oversold Stocks Good Investments?

Grisanti went on to describe MAI Capital Management’s strategy to take a look at stocks that have been down recently as prospective investment opportunities. This seems to be a long-term strategy whereby investors can really try and get good, reliable, and financially strong companies added to their portfolios at a bargain. Blue chip stocks are, in this way, some of the best names to keep an eye on in a potentially slowing market since these companies are typically considered to be large-cap, reliable, and profitable investments that can offer their shareholders significant long-term returns, provided they stick with them through the tough times. Despite this, we are seeing many blue chip names joining the growing list of oversold stocks this year as investors flee their positions for various reasons.

However, we still think that many of these names can act as valuable additions to any investor’s portfolio, which is why we have compiled a list of some oversold blue chip stocks to buy heading into August. Considering hedge fund and analyst sentiments surrounding many of these stocks, it is safe to say that they may be some of the best blue chip stocks to buy right now. Many of these names will be found on several lists of top 50 blue chip companies and so on, making them attractive investments to at least consider at this point in time.

Our Methodology

We used the Relative Strength Index (RSI) indicator to pick oversold blue chip stocks for our list. The RSI indicator is a momentum indicator used in the technical analysis of stocks by measuring the speed and magnitude of a security’s recent price changes to evaluate whether the price of that security is overvalued or undervalued. Stocks with RSI values of over 70 are traditionally considered to be overbought, while those with RSI values under 30 are oversold. We used a stock screener to find blue chip stocks with RSI values under 30 and then ranked them based on this metric, from the highest to the lowest RSI value. We also mentioned the number of hedge funds holding stakes in each stock, using Insider Monkey’s hedge fund data for the first quarter.

Oversold Blue Chip Stocks To Buy

10. Equifax Inc. (NYSE:EFX)

Number of Hedge Fund Holders: 30

14-day RSI as of August 3: 29.38

Equifax Inc. (NYSE:EFX) is a data, analytics, and technology company operating in the research and consulting services industry. The company is based in Atlanta, Georgia. It operates through its Workforce Solutions, US Information Solutions, and International segments.

Andrew Steinerman, an analyst at JPMorgan, maintains an Overweight rating on shares of Equifax Inc. (NYSE:EFX) as of July 21. The analyst also raised his price target on the stock from $238 to $260.

There were 30 hedge funds long Equifax Inc. (NYSE:EFX) in the first quarter, with a total stake value of $2.2 billion.

Holding 782,012 shares in the company, Ako Capital was the most prominent shareholder in Equifax Inc. (NYSE:EFX) at the end of the first quarter.

TimesSquare Capital Management made the following comment about Equifax Inc. (NYSE:EFX) in its third-quarter 2022 investor letter:

“New to the portfolio is Equifax Inc. (NYSE:EFX), a credit bureau that also provides human capital management outsourcing services. Their Workforce Solutions segment continues to grow at a steady pace.”

9. Moderna, Inc. (NASDAQ:MRNA)

Number of Hedge Fund Holders: 40

14-day RSI as of August 3: 29.38

Tyler Van Buren, an analyst at TD Cowen, holds an Outperform rating on shares of Moderna, Inc. (NASDAQ:MRNA) as of July 24. The analyst also placed a price target of $165 on the shares.

Based in Cambridge, Massachusetts, Moderna, Inc. (NASDAQ:MRNA) is a biotechnology company. It discovers, develops, and commercializes messenger RNA therapeutics and vaccines for the treatment of infectious diseases, immuno-oncology, rare diseases, autoimmune, and cardiovascular diseases.

Moderna, Inc. (NASDAQ:MRNA) was spotted in the portfolios of 40 hedge funds at the end of the first quarter. Their total stake value in the stock was $2.6 billion.

Baron Funds said the following about Moderna, Inc. (NASDAQ:MRNA) in its first-quarter 2023 investor letter:

“Moderna, Inc. (NASDAQ:MRNA) is a leader in the emerging field of mRNA-based vaccines and therapeutics and was one of the three main producers of the COVID vaccine. Shares fell during the quarter. We believe as COVID shifts away from pandemic status and becomes an increasingly commercial market (rather than government funded), there is increasing investor uncertainty around what a booster market could look like, which is pressuring shares. Looking beyond COVID, we think Moderna has the potential to disrupt the biopharmaceutical industry, from infectious disease vaccines to oncology, and we remain shareholders.”

Just like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and The Procter & Gamble Company (NYSE:PG), Moderna, Inc. (NASDAQ:MRNA) is a popular blue chip stock according to hedge fund sentiment in 2023.

8. Lamb Weston Holdings, Inc. (NYSE:LW)

Number of Hedge Fund Holders: 49

14-day RSI as of August 3: 28.36

BlueDrive Global Investors was the most prominent shareholder in Lamb Weston Holdings, Inc. (NYSE:LW) at the end of the first quarter, holding 255,569 shares in the company.

Lamb Weston Holdings, Inc. (NYSE:LW) is a packaged foods and meat company operating in the consumer staples sector. It produces, distributes, and markets frozen potato products worldwide. The company is based in Eagle, Idaho.

As of July 20, Marc Solecitto, an analyst at Barclays, maintains an Equal Weight rating on shares of Lamb Weston Holdings, Inc. (NYSE:LW). The analyst also raised the firm’s price target on the stock from $120 to $125.

We saw 49 hedge funds holding stakes in Lamb Weston Holdings, Inc. (NYSE:LW) during the first quarter, with a total stake value of $2.5 billion.

This is what The London Company said about Lamb Weston Holdings, Inc. (NYSE:LW) in its first-quarter 2023 investor letter:

“Lamb Weston Holdings, Inc. (NYSE:LW) -LW’s outperformance was driven by solid quarterly results, which included double-digit pricing actions, healthy demand, and higher productivity. Productivity savings helped generate higher incremental margins and the company should drive margins higher as input costs normalize. The fry attachment rate remains above pre- pandemic levels. This is a consolidated industry and the long- term outlook remains very favorable. We remain attracted to LW’s market share, pricing power, and industry tailwinds.”

7. Raytheon Technologies Corporation (NYSE:RTX)

Number of Hedge Fund Holders: 48

14-day RSI as of August 3: 28.18

Our hedge fund data for the first quarter shows 48 hedge funds holding stakes in Raytheon Technologies Corporation (NYSE:RTX), with a total stake value of $947 million.

An Outperform rating was maintained on shares of Raytheon Technologies Corporation (NYSE:RTX) on July 26 by Ken Herbert, an analyst at RBC Capital. The analyst also placed a price target of $105 on the stock.

Raytheon Technologies Corporation (NYSE:RTX) is an aerospace and defense company. It provides systems and services for commercial, military, and governmental customers across the globe. The company is based in Arlington, Virginia.

Just like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and The Procter & Gamble Company (NYSE:PG), Raytheon Technologies Corporation (NYSE:RTX) is a blue chip stock investors should be picking up this year.

6. Extra Space Storage, Inc. (NYSE:EXR)

Number of Hedge Fund Holders: 23

14-day RSI as of August 3: 27.72

Extra Space Storage, Inc. (NYSE:EXR) is a self-storage real estate investment trust company. The company is self-administered and self-managed, and as of March 2023, it owned and operated 2,388 self-storage stores in 41 states and Washington, DC. It is based in Salt Lake City, Utah.

Extra Space Storage, Inc. (NYSE:EXR) was spotted in the 13F holdings of 23 hedge funds in the first quarter. Their total stake value in the company was $227.5 million.

On June 16, Ki Bin Kim, an analyst at Truist Securities, maintained a Hold rating on shares of Extra Space Storage, Inc. (NYSE:EXR). The analyst also placed a price target of $155 on the shares.

Cercano Management was the largest shareholder in Extra Space Storage, Inc. (NYSE:EXR) at the end of the first quarter, holding 21,206 shares in the company.

Here’s what Baron Funds said about Extra Space Storage, Inc. (NYSE:EXR) in its second-quarter 2023 investor letter:

“Following its pending merger with Life Storage, Inc. which is expected to close late in 2023, Extra Space Storage Inc. (NYSE:EXR), a best-in-class self-storage REIT, will be the largest self-storage operator with a $46 billion self-storage operating portfolio. In the most recent quarter, the shares declined because rent growth is moderating from its strong pace of the last few years.

Though 2023 may be a transition year for Extra Space as growth retraces to a more sustainable run-rate and the management team prepares to incorporate Life Storage, we remain optimistic about the long-term prospects for the company and believe the current price of its shares reflects a good portion of this anticipated transition.

We believe Extra Space’s management team is excellent. Over the last decade, management has delivered strong occupancy gains, rent growth, and expense control that has led to a cost-of-capital advantage relative to its peers. Management has capitalized on its cost-of-capital advantage relative to its peers by tripling its owned self-storage count since 2010. We believe the management team will continue to create tremendous value for shareholders and believe the long-term growth opportunity for the company remains strong.”

Click to continue reading and see the 5 Oversold Blue Chip Stocks To Buy.

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Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

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Click to continue reading…

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