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Best Oversold Stocks to Buy for January 2022

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·4 min read
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At my research firm, MAPsignals, we track the Big Money looking for trends. We believe Big Money analysis can alert you to market and sector trends. Here’s what daily buys and sells looks like over the last six months. It’s been choppy:

That’s what a rotational market looks like. See the red bars? Those are stocks we believe are getting sold. When red bars run rampant, good names can get crushed. They can become what I call “oversold.”

And that can mean opportunity. Let’s look at five stocks seeing lots of red that appear to be near-term oversold: ROKU, BABA, RH, ZM & ETSY.

Up first is Roku, Inc. (ROKU), the television streaming platform.

Even though great companies’ stocks can be volatile, like ROKU over the past year, they’re worthy of attention, especially on pullbacks. Check out ROKU:

  • 1-month performance (-24.2%)

  • Recent Big Money sell signals

To show you what our Big Money signals looks like on a stock, have a look at all the buys (green bars) and sells (red bars) in ROKU over the past year:

Clearly, that’s a lot of red since September.

Looking more broadly, Roku has been a high-quality stock for years. The blue bars in the chart below show when ROKU was likely being bought by a Big Money player and also a high-ranking stock, according to MAPsignals.

When you see a lot of blue, like ROKU did in 2019 (when it hovered around half of its current price), it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Buying and strong fundamentals. As you can see, Roku’s recent numbers have been strong, making it worth of attention at these levels:

  • 1-year EBITDA growth rate (+18.9%)

  • 1-year sales growth rate (+57.5%)

Next up is Alibaba Group Holding Ltd. (BABA), which is a Chinese technology giant – it’s like China’s Amazon.

Check out these technicals for BABA:

  • 1-month performance (7.5%)

  • Recent Big Money signals

It’s been getting hammered for more than a year:

But now let’s look long-term. These are the top buy signals Alibaba has made since 2016. The Big Money has been all over it for a while:

Source: www.MAPsignals.com

Let’s look under the hood. As you can see, Alibaba has had rock-solid, double-digit growth in earnings and revenue:

  • 1-year EBITDA growth rate = (+17.4%)

  • 1-year sales growth rate = (+44.6%)

Another growth name is Restoration Hardware (RH), which is a luxury home furnishings retailer.

Strong candidates for growth usually have Big Money buying the shares. RH has historically had that. But recently, it’s full of red which could be an opportunity:

  • 1 month performance (-19.6%)

  • Historical Big Money signals

Below are the blue Big Money signals RH has made since 2015. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s dig deeper. RH’s growth in earnings is impressive, as is its sales growth. I expect more of the same in the coming years:

  • 1-year EBITDA growth rate = (+10.7%)

  • 1-year sales growth rate = (+7.6%)

Number four on the list is Zoom Video Communications, Inc. (ZM), which is a video conferencing platform and popular “stay-at-home” stock.

Here are the technicals important to me:

  • 1 month performance (-12.2%)

  • Historical Big Money signals

Recently, it’s been a choppy downward slide, with more Big Money selling than buying:

But not long ago, Zoom was a Big Money darling. Below are the Big Money buy signals for ZM since it’s 2019 trading debut:

Source: www.MAPsignals.com

Let’s look under the hood. Despite its price slide, Zoom has been growing earnings nicely and generated huge sales growth:

  • 1-year EBITDA growth rate = (+6.4%)

  • 1-year sales growth rate = (+325.8%)

Our last growth candidate is Etsy, Inc. (ETSY), which is an online marketplace and commerce platform. A strong final quarter in 2021 of Big Money buying has given way to steep declines:

Check out these technicals:

  • 1-month performance (-24.1%)

  • Historical Big Money signals

Etsy is a high-quality stock since it’s made my Top 20 report. As you can see below, it’s been a Big Money favorite since 2016. Right now, it’s on a pullback and could be an opportunity.

Source: www.MAPsignals.com

Now let’s look below the surface a bit. Earnings have been growing quite well, and there’s been enormous sales growth:

  • 1-year EBITDA growth rate = (+16.2%)

  • 1-year sales growth rate = (+110.9%)

The Bottom Line

ROKU, BABA, RH, ZM & ETSY represent the top oversold stocks for January 2022. They’ve been sold a lot lately…perhaps too much. Strong, fundamentally-sound stocks seeing near-term sell signals are worthy of extra attention because of their long-term potential.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in ROKU, BABA, ZM & ETSY in managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

This article was originally posted on FX Empire

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