U.S. Markets close in 5 hrs 33 mins
  • S&P 500

    4,309.19
    -88.75 (-2.02%)
     
  • Dow 30

    33,722.19
    -543.18 (-1.59%)
     
  • Nasdaq

    13,411.19
    -357.73 (-2.60%)
     
  • Russell 2000

    1,987.92
    -36.12 (-1.78%)
     
  • Crude Oil

    0 (0)
     
  • Gold

    1,836.10
    -6.50 (-0.35%)
     
  • Silver

    24.34
    -0.37 (-1.50%)
     
  • EUR/USD

    1.1348
    +0.0031 (+0.2724%)
     
  • 10-Yr Bond

    1.7120
    -0.0350 (-2.00%)
     
  • Vix

    28.85
    +3.26 (+12.74%)
     
  • GBP/USD

    1.3555
    -0.0045 (-0.3321%)
     
  • USD/JPY

    113.6500
    -0.4500 (-0.3944%)
     
  • BTC-USD

    33,637.81
    -1,695.08 (-4.80%)
     
  • CMC Crypto 200

    760.05
    -50.55 (-6.24%)
     
  • FTSE 100

    7,494.13
    -90.88 (-1.20%)
     
  • Nikkei 225

    27,522.26
    -250.64 (-0.90%)
     

After Plunging 14.8% in 4 Weeks, Here's Why the Trend Might Reverse for United Community Banks (UCBI)

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • UCBIO

United Community Banks (UCBI) has been beaten down lately with too much selling pressure. While the stock has lost 14.8% over the past four weeks, there is light at the end of the tunnel as it is now in oversold territory and Wall Street analysts expect the company to report better earnings than they predicted earlier.

How to Determine if a Stock is Oversold

We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price movements.

RSI oscillates between zero and 100. Usually, a stock is considered oversold when its RSI reading falls below 30.

Technically, every stock oscillates between being overbought and oversold irrespective of the quality of their fundamentals. And the beauty of RSI is that it helps you quickly and easily check if a stock's price is reaching a point of reversal.

So, by this measure, if a stock has gotten too far below its fair value just because of unwarranted selling pressure, investors may start looking for entry opportunities in the stock for benefitting from the inevitable rebound.

However, like every investing tool, RSI has its limitations, and should not be used alone for making an investment decision.

Why a Trend Reversal is Due for UCBI

The heavy selling of UCBI shares appears to be in the process of exhausting itself, as indicated by its RSI reading of 28.92. So, the trend for the stock could reverse soon for reaching the old equilibrium of supply and demand.

3-month RSI Chart for UCBI
3-month RSI Chart for UCBI

The RSI value is not the only factor that indicates a potential turnaround for the stock in the near term. On the fundamental side, there has been strong agreement among the sell-side analysts covering the stock in raising earnings estimates for the current year. Over the last 30 days, the consensus EPS estimate for UCBI has increased 3.3%. And an upward trend in earnings estimate revisions usually translates into price appreciation in the near term.

Moreover, UCBI currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than the 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises. This is a more conclusive indication of the stock's potential turnaround in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

United Community Banks, Inc. (UCBI) : Free Stock Analysis Report

To read this article on Zacks.com click here.