The NASDAQ-100 index, heavily weighted by the megacap technology companies, has had a brilliant resurgence this year riding fueled by the recent advancements in the artificial intelligence space. The index is up more than 45% year-to-date as of July 31, compared to nearly 38% for the NASDAQ Composite index during the same period.
Several technology stocks listed on the NASDAQ and part of the NASDAQ-100 index have been on a tear this year. Graphics cards maker NVIDIA Corp (NASDAQ:NVDA) shares have more than tripled this year while the share price for Elon Musk’s electrical vehicle company, Tesla, Inc. (NASDAQ:TSLA) has more than doubled.
The index, which represents the 100 largest non-financial stocks listed on the NASDAQ weighted according to market capitalization, has become heavily weighted with megacap technology stocks. The companies with individual weightings exceeding 4.5% saw their combined weights surpassing 48%. This triggered a special rebalancing which came into effect on July 24. As part of the rebalancing, the combined weighting of the stocks with individual weightings exceeding 4.5% has been capped at 40%. This is expected to reduce the influence of few large companies on the performance of the whole index.
Oversold stocks represent an opportunity for savvy investors as the indicators typically show that the shares are trading at prices lower than their value. The prices of a stock can be depressed due to many factors, including macroeconomic factors such as interest rates, inflation, political factors such as the Russia-Ukraine conflict, as well as company specific factors such as earnings miss or other negative catalysts.
The macroeconomic environment has started to brighten after a long period of bleakness. The latest economic data shows that the United States economy grew at an annualized rate of 2.4% in Q2 2023, nearly a full percentage point more than consensus estimates. Interest rate hikes are also nearing their end with inflation showing better than expected results. You can read more about the latest developments in our recent article: 10 Most Oversold S&P 500 Stocks Right Now
Our list of 10 oversold NASDAQ stocks to buy includes companies from the healthcare, technology, financials, and consumer cyclical sectors. It includes Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), Vir Biotechnology, Inc. (NASDAQ:VIR), Wingstop Inc. (NASDAQ:WING), and Churchill Downs Incorporated (NASDAQ:CHDN), among others.
Photo by Pascal Bernardon on Unsplash
Methodology
For this article, we compiled a list of 10 NASDAQ stocks with the lowest 14-day Relative Strength Index (RSI) as of July 28. The Relative Strength Index is a technical indicator that tracks momentum changes in stock prices. It was developed by J. Welles Wilder, and it is calculated by determining the mean of gains and losses of a stock in the last 14 days. An RSI above 70 implies that a stock is overbought and below 30 implies that it is oversold. These levels can be adjusted if needed. The stocks in this article are listed in descending order of their RSI.
We only chose the stocks that have market capitalizations of more than $1.0 billion as shares of companies with low market capitalization are susceptible to high volatility.
10. Churchill Downs Incorporated (NASDAQ:CHDN)
14-day RSI as of July 28: 26.45
Number of Hedge Fund Holders: 26
Founded in 1875 and based in Louisville, Kentucky, Churchill Downs Incorporated owns and operates 13 live and historical racing entertainment venues in three states, one of the largest online horse racing wagering platforms in the U.S., twelve casino gaming properties in ten states, and ten retail sportsbooks.
On June 19, Churchill Downs Incorporated announced that it has secured a site in eastern Daviess County, outside of the Owensboro city limits, to build its previously announced historical racing machine entertainment venue as an annex of Ellis Park Racing & Gaming. The updated development and investment plans will be shared by the company in the upcoming months.
The Churchill Downs Racetrack of Churchill Downs Incorporated witnessed an unusual number of horse injuries during the month of May which led to 12 equine facilities. Following these incidents, the company suspended racing operations at the racetrack. On July 31, the company announced plans to resume racing operations at the track from September 14, following a comprehensive evaluation and several key enhancements to ensure safety at the track.
Also on July 31, BofA Securities reiterated a ‘Buy’ rating for Churchill Downs Incorporated shares and lowered the price target to $142 from $155.
9. NovoCure Limited (NASDAQ:NVCR)
14-day RSI as of July 28: 26.24
Number of Hedge Fund Holders: 19
Root, Switzerland-based NovoCure Limited (NASDAQ:NVCR) is a global oncology company working to extend survival in some of the most aggressive forms of cancer through the development and commercialization of our innovative therapy, Tumor Treating Fields.
The portfolio of NovoCure Limited includes products approved in certain countries for the treatment of adult patients with glioblastoma, malignant pleural mesothelioma, and pleural mesothelioma. Its clinical trials pipeline includes Tumor Treating Fields in brain metastases, gastric cancer, glioblastoma, liver cancer, non-small cell lung cancer, pancreatic cancer, and ovarian cancer.
On July 27, NovoCure Limited released its financial results for Q2 2023. It generated a revenue of $126 million and a net loss of $57 million. During the quarter, phase 3 LUNAR trial in non-small cell lung cancer met primary and key secondary survival endpoints, and the interim analysis for its phase 3 PANOVA-3 trial in pancreatic cancer concluded with recommendation to proceed to final analysis.
Following the earnings release, Wells Fargo lowered the price target on NovoCure Limited shares to $102 from $104 and maintained an ‘Overweight’ rating. The target price represents a potential upside of 212.12% based on the share price on July 28.
8. Wingstop Inc. (NASDAQ:WING)
14-day RSI as of July 28: 24.97
Number of Hedge Fund Holders: 27
Dallas, Texas-based Wingstop Inc. is an international restaurant chain operator with more than 2,000 locations globally. The restaurants offer classic and boneless wings, tenders, and chicken sandwiches worldwide.
Wingstop Inc. hit the milestone of 2,000 global restaurants with the opening of a restaurant in Pittsburgh, Pennsylvania, announced on May 9. The company intends to continue with the expansion of its global presence with the goal to exceed 7,000 global locations.
On July 24, Citigroup lowered the target price for Wingstop Inc. shares to $210 from $224 and maintained a ‘Neutral’ rating for the shares. The target price represents an upside potential of more than 27% based on the share price on July 28.
As of March 31, Wingstop Inc. shares were held by 27 hedge funds with a total value of $328 million. Leading hedge fund investors included Citadel Investment Group, Driehaus Capital, and D E Shaw, among others.
7. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
14-day RSI as of July 28: 24.75
Number of Hedge Fund Holders: 42
London-based Willis Towers Watson Public Limited Company (NASDAQ:WTW), is a leading global advisory, broking and solutions company that provides data-driven, insight-led solutions in the areas of people, risk, and capital.
On July 28, Raymond James lowered the price target on Willis Towers Watson Public Limited Company shares to $260 and changed the rating on the shares to ‘Outperform’ from ‘Strong Buy’. The target price represents a 24.34% potential upside based on the share price on 28 July.
As of Q1 2023, Willis Towers Watson Public Limited Company shares were held by 42 hedge funds, the highest on our list of 10 oversold NASDAQ stocks to buy. First Eagle Investment Management was the largest hedge fund shareholder with ownership of 4.9 million shares valued at $1.1 billion.
6. Perficient, Inc. (NASDAQ:PRFT)
14-day RSI as of July 28: 24.33
Number of Hedge Fund Holders: 21
Perficient, Inc. (NASDAQ:PRFT) is a leading global digital consultancy offering services including Strategy and Transformation; Data and Intelligence; Platforms and Technology; Customer Experience and Digital Marketing; Innovation and Product Development; and Optimized Global Delivery.
On July 27, Perficient, Inc. released its Q2 2023 financial results. Even though revenue increased 4% y-o-y to $231 million, net income declined 5% y-o-y to $26.4 million. The normalized EPS for the quarter was $1.00 which missed consensus estimates by $0.11.
Following the earnings release, Needham reiterated a ‘Buy’ rating for Perficient, Inc. shares with an unchanged target price of $85 which represents a potential upside of more than 33% based on the share price on July 28.
5. Vir Biotechnology, Inc. (NASDAQ:VIR)
14-day RSI as of July 28: 23.76
Number of Hedge Fund Holders: 22
San Francisco, California-based Vir Biotechnology, Inc. is a commercial-stage immunology company focused on the development of therapies to treat and prevent serious infectious diseases. Its current development pipeline consists of product candidates targeting COVID-19, hepatitis B and D viruses, influenza A and human immunodeficiency virus.
On July 20, Vir Biotechnology, Inc. announced that the Phase 2 Prevention of Illness Due to Influenza A (PENINSULA) trial evaluating VIR-2482 for the prevention of symptomatic influenza A illness did not meet primary or secondary efficacy endpoints.
Following the announcement, Barclays lowered the price target for Vir Biotechnology, Inc. shares to $41 from $59 while maintaining an ‘Overweight’ rating. The price target represents a potential upside of 189.96% based on the share price on July 28.
As of Q1 2023, Vir Biotechnology, Inc. shares were owned by 22 of the 943 hedge funds tracked by Insider Monkey, with a total value of $161 million. Notable hedge fund investors included Point72 Asset Management, Avidity Partners Management, and Renaissance Technologies, among others.
4. Impinj, Inc. (NASDAQ:PI)
14-day RSI as of July 28: 22.66
Number of Hedge Fund Holders: 28
Seattle, Washington-based Impinj, Inc. (NASDAQ:PI) is a technology company providing RAIN RFID (Radio-frequency identification devices) and software platform. Its offerings enable businesses and people to analyze, optimize, and innovate by wirelessly connecting billions of everyday things — such as apparel, automobile parts, luggage, and shipments — to the Internet.
On July 26, Impinj, Inc. released its financial results for Q2 2023. Its revenue increased by 44% y-o-y to $86 million while net loss shrunk by 30% y-o-y to $8 million. The normalized EPS, at $0.33, managed to exceed consensus estimates by $0.02.
Following the earnings release, Roth MKM analyst Scott Searle lowered the price target on Impinj, Inc. shares to $105 from $120 while maintaining a ‘Buy’ rating. The target price represents a potential upside of 56.25% based on the share price on July 28.
3. Euronet Worldwide, Inc. (NASDAQ:EEFT)
14-day RSI as of July 28: 18.22
Number of Hedge Fund Holders: 28
Euronet Worldwide, Inc. (NASDAQ:EEFT) is an electronic financial transaction solutions provider. It operates one of the largest independent ATM networks in Europe, is a leading payment network for prepaid mobile top-up, and a leading global money transfer company.
Euronet Worldwide, Inc. reported a strong financial and operational performance in Q2 2023. Its revenue increased by 11% y-o-y to $939 million while net income increased by 51% y-o-y to $86 million. With a 17% y-o-y increase, the adjusted EPS at $2.03 surpassed consensus estimates by $0.02.
On July 27, Needham lowered the price target on Euronet Worldwide, Inc. shares to $125 from $140 and maintained a ‘Buy’ rating on the shares.
As of Q1 2023, 28 hedge funds owned shares of Euronet Worldwide, Inc., valued at $278 million.
2. SAGE Therapeutics, Inc. (NASDAQ:SAGE)
14-day RSI as of July 28: 16.96
Number of Hedge Fund Holders: 27
Founded in 2010, Cambridge, Massachusetts-based SAGE Therapeutics, Inc. (NASDAQ:SAGE) is a biopharmaceutical company focused on the development of novel therapies for the treatment of debilitating disorders of the brain. Its lead product, Zulresso, is approved by the FDA for the treatment of postpartum depression.
On February 6, SAGE Therapeutics, Inc. announced that the FDA has accepted the filing of a New Drug Application (NDA) for zuranolone for the treatment of major depressive disorder (MDD) and postpartum depression. The application was granted priority review with a Prescription Drug User Fee Act (PDUFA) action date of August 5, 2023.
On July 27, Scotiabank initiated coverage of SAGE Therapeutics, Inc. shares with a target price of $61 and an ‘Outperform’ rating. The target price represents a potential upside of 74.49% based on the share price on July 28.
1. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS)
14-day RSI as of July 28: 14.28
Number of Hedge Fund Holders: 42
Waltham, Massachusetts-based Apellis Pharmaceuticals, Inc. is a biopharmaceutical company focused on the development of therapies for treatment of debilitating diseases by controlling complement, part of the body’s immune system. The company is exploring programs across ophthalmology, nephrology, hematology, and neurology by targeting the C3, the only target in the complement cascade that addresses all three pathways that can drive disease.
Apellis Pharmaceuticals, Inc. received FDA approval of SYFOVRE™ (pegcetacoplan injection) in February 2023 for the treatment of geographic atrophy. EMPAVELI, for the treatment of Paroxysmal Nocturnal Hemoglobinuria, is the other commercial product of the company.
Apellis Pharmaceuticals, Inc. ranks #1 on our list of 10 oversold NASDAQ stocks to buy based on the 14-day RSI of 14.28. The shares of the company were also widely owned by hedge funds, as of Q1 2023, with 42 of the 934 prominent hedge funds tracked by Insider Monkey holding its shares valued at $2.0 billion.
You may also like to read 10 Most Oversold S&P 500 Stocks Right Now and 10 Best Small Cap AI Stocks To Buy Now
Suggested Articles:
- 20 Expensive Places to Retire That Are Worth It
- 15 Largest Pizza Chains in the US
- 16 Fastest Growing Blue-Collar Jobs
This article is originally published at Insider Monkey.
