Software giant Oracle and five consumer names are among Wall Street’s most overbought stocks
The market’s resilience in the face of a banking crisis, rising rates and persistent inflation has had an adverse effect: Some individual stocks are in deep overbought territory and could be due to a short-term pullback. The S&P 500 is up 5.4% year to date and roughly 3% over the past month, as investors largely shake off concerns over the US banking system following the collapse of Silicon Valley Bank and Signature Bank. However, there are some stocks that might have overextended themselves, based on their relative strength index levels. A stock is considered overbought if its 14-day RSI goes above 70, meaning investors should consider easing their exposure. Meanwhile, a stock with a 14-day RSI under 30 is considered oversold, meaning it may want more to that name. CNBC Pro screened for S&P 500 stocks in overbought territory, based on their relative strength index. Here are the top 10. Oracle topped the list with a 14-day RSI of 95.6. The software stock has been on fire this year, rising 17.4%. It’s also up 51.6% over the past six months, as investors plow back into beaten-down tech names. To be sure, the analyst’s average price target suggests Oracle may be running steam, as it implies an upside of just 3.3% over the next 12 months. On top of that, only 39.4% of analysts covering the stock rate as buying. ORCL YTD mountain ORCL in 2023 Another stock deep in overbought territory is Hershey , with the chocolate maker’s RSI at 90. Hershey shares have outperformed this year, gaining 12.2%. However, only 31.8% of analysts have buy ratings on the stock, and the average price target points to a slight decline going forward. Wells Fargo analyst Chris Carey upgraded Hershey last month to equal weight from underweight, highlighting strong earnings tailwinds heading into 2024 as well as the stock’s defensive characteristics. However, he also noted that Hershey’s valuation “is peak (absolute and vs Food though still below peak vs SPX) and it’s not lost on us this market could turn offensive again, with any green shoot on the economy.” Other consumer names that made the list are Conagra Brands, Kimberly-Clark, General Mills and McCormick. CNBC Pro is also screened for stocks that are oversold. MarketAxess was the only name that met the criteria with a 14-day RSI of 27.1. The stock tumbled 12.3% to start the second quarter, but it’s still up 23% year to date. Over the past six months, shares of the electronic trading platform have gained 45.7%. That said, just 7% of analysts covering the stock rate it as buy, and the average price target implies an upside of just 3.7%. There are other S&P 500 stocks close to being oversold, including Generac and First Republic . Both stocks have 14-day RSIs of 30.9. Generac shares have struggled in 2023, falling nearly 1%. It has also lost 35% over the past six months. Bank of America analyst Julien Dumoulin-Smith downgraded the stock to underperform from neutral in March. “The weakening of consumers and idiosyncratic operational challenges are key drivers of our now more pessimistic outlook,” the analyst said. As for First Republic, the regional bank’s stock has been volatile in recent weeks on concerns the company could suffer a similar fate to Signature Bank and SVB. Shares have tumbled more than 87% over the past month. FRC 1M mountain FRC this past month Other stocks approaching oversold territory are Charles Schwab , Digital Realty , Applied Materials , AMD , CH Robinson , Teradyne and Albemarle . — CNBC’s Michael Bloom contributed reporting.