In this piece, we will take a look at the 11 oversold value stocks to buy now. If you want to skip our overview of what defines an oversold stock and the basics of value investing, then you can take a look at the 5 Oversold Value Stocks To Buy Now.
Analyzing stocks in 2024 is quite different from analyzing them a couple of decades back. In fact, even as early as the early 1990s, traders had significantly lesser amounts of data at their disposal for their trading strategies, as they operated in an era that came to be defined by the rise of quantitative trading through pioneers such as D.E. Shaw of the D. E. Shaw Group and patient value investors like Seth Klarman of Baupost Group and Warren Buffett of Berkshire Hathaway.
While quantitative trading is characterized by its data heavy approach that sees hedge funds rely on voluminous amounts of data to make their bets, it’s not the only strategy that uses data. Another data intensive approach is called technical trading, and it can be considered a rather distant cousin of quantitative trading. This is because both these strategies rely on statistical concepts such as averages and correlation. However, technical trading relies more on underlying stock movements, and it concerns itself with metrics such as moving averages for share prices, the correlation between share prices and broader stock indexes, the pace of share price movement over a unit time period, and whether a stock is seeing higher buying or selling interest compared to historical data.
Measuring the buying or selling interest is officially dubbed as checking whether a stock is overbought or oversold. It is measured through an indicator called the relative strength index (RSI), which is simply a complex ratio of share price gains and losses over a fixed time period. The RSI indicator lets investors potentially determine whether a stock is undersold or oversold and helps them position their portfolios accordingly. An RSI score greater than 70 shows that a stock might be overbought while a reading below 30 shows that it might be oversold. While an RSI reading can indicate an oversold stock that might be ripe for buying, it can also be combined with other indicators.
Two such approaches, particularly when evaluating oversold stocks (and oversold value stocks as well), involve the share price and share price moving averages. For the share price, if it is falling and setting new lows while the RSI reading is rising or setting higher new lows, then the price can be construed to potentially rise in the future based on these technical indicators alone. Similarly, a rising RSI coupled with a rising price that crosses moving averages is also used by some to start buying.
While oversold stocks are evaluated purely on the basis of their share price dynamics, value stocks evaluate equities with respect to a fair value. If the price is lower than a fair value, then depending on the difference, a trader can buy shares with the hope that they will rise in value over time. This approach is called value investing, and for some value stocks, you can take a look at 13 High Growth Value Stocks to Invest in According to Seth Klarman.
The next thing to ask is whether investing in stocks based on technical indicators such as RSI or a value strategy is worth it. Well, for a back of the envelope, we can analyze the performance of oversold stocks and value stocks. We covered these kinds of stocks as part of our overage of 10 Oversold Large Cap Stocks to Buy and 12 Best Value Stocks To Buy Heading Into 2024 (Picked By Seth Klarman). Starting with the oversold stocks, the six month average share price performance of the stocks in this list is 14.9%. In fact, this improves if we remove the latest troubles surrounding Lamb Weston Holdings, Inc. (NYSE:LW)’s shares that sank in April due to a software issue affecting its guidance and earnings. Without $LW, the stocks are up 18% on average. Similarly, for the second list, the 12 value stocks are up by an average of 14.69%, showing that value stocks and oversold stocks, when correctly picked, might end up having a lot of merit.
With these details in mind, let’s take a look at some oversold value stocks. A couple of notable names are Lamb Weston Holdings, Inc. (NYSE:LW), Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK), and Globe Life Inc. (NYSE:GL).
A portfolio manager analyzing a line graph displaying stock performance of the company.
Our Methodology
To make our list of the oversold value stocks to buy, we chose the stocks with the lowest RSI scores, a price to earnings ratio lower than 15, and average analyst ratings of Buy or better. Only stocks with a market capitalization greater than $300 million were chosen.
For these oversold value stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11 Oversold Value Stocks To Buy Now
11. The Liberty SiriusXM Group (NASDAQ:LSXMA)
Number of Q4 2023 Hedge Fund Shareholders: 45
Latest RSI Score: 30.02
Trailing P/E Ratio: 11.29
The Liberty SiriusXM Group (NASDAQ:LSXMA) is an American media and broadcasting company that broadcasts content through satellites, smartphone applications, and other avenues. The shares are rated Strong Buy on average, and the average analyst share price target is $38.71.
During last year’s fourth quarter, 45 out of the 933 hedge funds profiled by Insider Monkey had bought and owned The Liberty SiriusXM Group (NASDAQ:LSXMA)’s shares. Warren Buffett’s Berkshire Hathaway owned the biggest stake which was worth $1.2 billion.
The Liberty SiriusXM Group (NASDAQ:LSXMA) joins Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK), Lamb Weston Holdings, Inc. (NYSE:LW), and Globe Life Inc. (NYSE:GL) in our list of highly oversold value stocks.
10. PVH Corp. (NYSE:PVH)
Number of Q4 2023 Hedge Fund Shareholders: 35
Latest RSI Score: 29.37
Trailing P/E Ratio: 10.10
PVH Corp. (NYSE:PVH) is a sizeable American clothing company with notable brands such as Calvin Klein and Tommy Hilfiger. The fact that it’s an oversold stock is unsurprising given the bloodbath following the latest earnings report in April 2024 which saw PVH Corp. (NYSE:PVH) post disappointing guidance.
As of Q4 2023 end, 35 out of the 933 hedge funds covered by Insider Monkey’s research had held a stake in the firm. PVH Corp. (NYSE:PVH)’s largest hedge fund shareholder is Richard S. Pzena’s Pzena Investment Management through its $774 million investment.
9. Under Armour, Inc. (NYSE:UA)
Number of Q4 2023 Hedge Fund Shareholders: 31
Latest RSI Score: 29.04
Trailing P/E Ratio: 7.36
Under Armour, Inc. (NYSE:UA) is another apparel company that makes and sells clothing, footwear, and other associated products. In the midst of a hot college basketball season in the U.S., the firm scored a win in March 2024 when it signed South Carolina’s guard as an ambassador for its basketball shoes.
For their fourth quarter of 2023 shareholdings, 31 out of the 933 hedge funds profiled by Insider Monkey were Under Armour, Inc. (NYSE:UA)’s shareholders. Anand Parekh’s Alyeska Investment Group owned the biggest stake which was worth $71.8 million.
8. InterDigital, Inc. (NASDAQ:IDCC)
Number of Q4 2023 Hedge Fund Shareholders: 24
Latest RSI Score: 28.29
Trailing P/E Ratio: 12.60
InterDigital, Inc. (NASDAQ:IDCC) is a mid sized American technology company that develops communications and entertainment software. Its investors were in for some bad news in April 2024 when Bank of America cut the share price rating to Underperform from Buy and reduced the share price target to $100 from $140.
By the end of 2023’s December quarter, 24 out of the 933 hedge funds part of Insider Monkey’s database had held a stake in the firm. InterDigital, Inc. (NASDAQ:IDCC) largest hedge fund investor is Spencer M. Waxman’s Shannon River Fund Management due to its $51.3 million investment.
7. Liberty Broadband Corporation (NASDAQ:LBRDA)
Number of Q4 2023 Hedge Fund Shareholders: 19
Latest RSI Score: 26.00
Trailing P/E Ratio: 11.00
Liberty Broadband Corporation (NASDAQ:LBRDA) is an American telecommunications company that provides voice, data, and other coverage products. While the firm is currently facing stiff competition from wireless providers, its CEO remained optimistic in March 2024 when he hoped that fixed capacity would prove to be rivals’ Achilles Heel.
Insider Monkey dug through 933 hedge fund portfolios for their fourth quarter of 2023 shareholdings to find 19 Liberty Broadband Corporation (NASDAQ:LBRDA) shareholders. Robert Henry Lynch’s Aristeia Capital owned the biggest stake that was worth $497 million.
6. Jack in the Box Inc. (NASDAQ:JACK)
Number of Q4 2023 Hedge Fund Shareholders: 21
Latest RSI Score: 25.73
Trailing P/E Ratio: 9.72
Jack in the Box Inc. (NASDAQ:JACK) is an American hospitality company that owns and operates restaurants. The firm scored a win in March 2024 when Wedbush upgraded the share rating to Outperform from Neutral and upgraded the share price target to $88 from $79. The shares are rated Buy on average, and the average analyst share price target is $87.56.
21 out of the 933 hedge funds part of Insider Monkey’s Q4 2023 database had bought and owned the firm’s shares. Jack in the Box Inc. (NASDAQ:JACK)’s largest hedge fund shareholder in our database is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital through its $30.2 million investment.
Lamb Weston Holdings, Inc. (NYSE:LW), Jack in the Box Inc. (NASDAQ:JACK), Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK), and Globe Life Inc. (NYSE:GL) are some oversold value stocks.
Click to continue reading and see 5 Oversold Value Stocks To Buy Now.
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Disclosure. None. 11 Oversold Value Stocks To Buy Now was initially published on Insider Monkey.