Rise of the Underdogs: 3 Oversold Stocks Making a Comeback
New investors often misinterpret oversold signals from the relative strength index (RSI) as a buy signal. However, an oversold signal is only a sign of where to look. It only tells us that security may have been moving to the downside too fast and there exists the possibility of making a quick trade with a price bounce. This means that prices can potentially drop further. In some cases, however, the oversold signal marks the start of some oversold stocks bottoming out, and heading back up in price.
One of the often noticeable signs of a comeback is the bullish divergence of the price and the RSI, characterized by the price going lower while the RSI moves up. In addition, price patterns like double bottoms also help indicate that strong support has been established. And once the price breaks out of its current price range, investors may be in for the start of a new trend. With these in mind, here are three previously oversold stocks that have started making their comeback.
Byline Bancorp (BY)
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Byline Bancorp (NYSE:BY) is Byline Bank’s holding company and oversees its business activities as a full-service commercial bank. The regional bank offers its services to clients of various sizes from commercial real estate to everyday consumers. Besides general banking services, the company offers clients treasury management, deposits, trust and wealth management services. With more than 100 years of service, the company has established itself as a community partner in its neighborhood.
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After BY bottomed out and went oversold last May due to the disastrous U.S. banking crisis, the stock has steadily recovered and has been slowly regaining what it lost in value. While the market is still worried about the banking crisis’s impacts on the sector, Byline is still optimistic about its business. It recently completed a merger with Inland to increase its deposit base. Furthermore, analysts have a positive outlook on BY based on their buy recommendation, making it one of our top oversold stocks to buy.
Cohen & Steers (CNS)
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Cohen & Steers (NYSE:CNS) is an investment management holdings company. It is well-known as a sector real estate and alternative income specialist and has a distribution network in the institutional and wealth space. This network includes broker-dealers, bank trusts, sovereign wealth funds, insurance companies, etc. According to its latest quarterly presentation, nearly half of CNS’s managed assets are comprised of U.S. real estate.
The company has steadily recovered after reaching oversold levels and carving a double bottom in May. While there hasn’t been much optimism for CNS’s managed assets, it still holds a reputation for successful REIT investing. That fact gives it a solid base of clients looking to diversify from traditional bonds and stock offerings. The stock’s price is also on the way to forming a bullish wedge pattern that can lead to another upward push.
Cactus (WHD)
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Cactus (NYSE:WHD) is an equipment solutions provider in the oil industry. They speicalize in manufacturing spoolable pipe technologies and pressure controls. WHD makes and sells pressure controls to production-phase gas and oil wells. Their spoolable pipes are utilized in oil, gas and liquid transportation of its onshore and onshore oil and gas well customers. The company is a recognized market leader in the U.S. surface equipment industry with its highly recognized proprietary wellhead systems.
WHD has steadily recovered after hitting its 52-week-low of $31.36 in May. JP Morgan recently initiated coverage of Cactus, further cementing the company’s attractiveness to hesitant investors. This makes it the 8th brokerage to cover WHD, which collectively gives the company a buy recommendation, earning it a spot on our list of oversold stocks to buy.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.
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