Oversold stocks can be an attractive option for investors looking to capitalize on potential opportunities in the market, by benefitting from the rebound potential of these undervalued assets.
Given this backdrop, investors could consider buying oversold stocks such as Comcast Corporation (CMCSA), Northrop Grumman Corporation (NOC), and Zimmer Biomet Holdings, Inc. (ZBH), with a lower than 30 RSI.
Investing in oversold stocks can present opportunities for investors to potentially capitalize on temporary downturns in stock prices. When a stock is considered oversold, it means that its price has dropped significantly, often beyond what is justified by its fundamentals. This can happen for a variety of reasons, such as market volatility, negative news, or simply investor sentiment.
Oversold stocks might suggests a potential turnaround and price rebound. Buy signals can come from technical indicators like RSI, moving averages, and stochastic oscillators, as well as positive earnings surprises or revenue growth.
Moreover, while these stocks offer opportunities for gains, investing in them after a significant price decline involves risk. However, when confirmed with other signals, an oversold stock can be a buying opportunity.
Considering these conducive trends, let’s examine the fundamentals of the three featured oversold stocks which look poised to rebound in the near term.
Comcast Corporation (CMCSA)
CMCSA operates as a media and technology company worldwide. It operates through Residential Connectivity & Platforms, Business Services Connectivity, Media, Studios, and Theme Parks segments.
On June 18, 2024, CMCSA’s FreeWheel, announced the launch of an enhanced product suite for programmatic transactions on live steaming events, including the Olympic Games Paris 2024.
In addition, it released, "It’s Only Live Once: How TV Advertisers Can Capture Audiences in the Moment…and How Streaming Is Changing the Game," adding additional support for marketers interested in advertising and exploring programmatic opportunities in the live streaming environment.
On June 13, 2024, CMCSA’s Xfinity Communities partnered with Yardi, to offer residents powerful internet connectivity at move-in, directly through Yardi's RentCafe resident portal. This partnership made Xfinity Internet, known for its high-speed connectivity and network reliability, along with other Xfinity services, available for residents to select in RentCafe, an innovative platform by Yardi.
CMCSA’s trailing-12-month CAPEX / Sales of 10.14% is 170.9% higher than the industry average of 3.74%. Likewise, its trailing-12-month EBIT margin and levered FCF margin of 19.25% and 18.86% are 118.3% and 135.6% higher than the industry averages of 8.82% and 8%, respectively.
CMCSA’s revenue for the fiscal first quarter that ended March 31, 2024, increased 1.2% year-over-year to $30.06 billion. Its free cash flow rose 19.4% from the year-ago quarter to $4.54 billion. Moreover, its adjusted net income stood at $4.17 billion, up 7.6% over the prior-year quarter. Also, its adjusted EPS grew 13.9% year-over-year to $1.04.
Analysts expect CMCSA’s revenue and EPS for the quarter ending September 30, 2024, to increase 5.9% each year-over-year to $31.90 billion and $1.14, respectively. The company surpassed the Street revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Over the past month, the stock has declined 6% to close the last trading session at $36.70. CMCSA’s RSI is currently at 29.95, indicating a buy signal.
CMCSA’s POWR Ratings reflect this positive outlook. It has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Value, Stability, and Quality. It is ranked first out of 8 stocks in the Entertainment - TV & Internet Providers industry. Click here to see CMCSA’s Growth, Momentum, and Sentiment ratings.
Northrop Grumman Corporation (NOC)
NOC operates as an aerospace and defense technology company in the U.S., Asia/Pacific, Europe, and internationally. The company operates through Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems segments.
NOC’s trailing-12-month asset turnover ratio of 0.87x is 10.9% higher than the industry average of 0.79x. Its trailing-12-month CAPEX/Sales of 4.33% is 49.3% higher than the industry average of 2.90%. Similarly, its trailing-12-month Return on Common Equity of 14.70% is 17.3% higher than the industry average of 12.54%.
NOC’s total sales for the fiscal first quarter that ended March 31, 2024, amounted to $10.13 billion, up 8.9% year-over-year. In addition, its operating income rose 13.1% from the year-ago quarter to $1.07 billion. The company’s net earnings stood at $944 million and $6.32 per share, up 12.1% and 14.9% over the prior-year quarter, respectively.
For the quarter ending June 30, 2024, NOC’s revenue and EPS are expected to increase 4.7% and 11.5% year-over-year to $10.03 billion and $5.95, respectively. It surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has declined 3.3% over the past nine months to close the last trading session at $425.83. NOC’s RSI is currently at 29.02.
NOC’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to Buy in our proprietary rating system.
NOC has a B grade for Momentum and Stability. It is ranked #18 out of 71 stocks in the Air/Defense Services industry. Get NOC’s Growth, Value, Sentiment, and Quality ratings here.
Zimmer Biomet Holdings, Inc. (ZBH)
ZBH operates as a medical technology company worldwide. The company designs, manufactures, and markets orthopedic reconstructive products, such as knee and hip products, S.E.T. products, and craniomaxillofacial and thoracic products.
On June 12, 2024, ZBH and RevelAi Health announced a multi-year co-marketing agreement to commercialize generative artificial intelligence-powered engagement solutions that advance value-based orthopedic care and health equity. During the agreement, ZBH will commercialize RevelAi Health's patient care-management platform, care team dashboard for providers, and any future products or services.
On June 11, 2024, ZBH and THINK Surgical, Inc. signed a limited distribution agreement for the TMINI Miniature Robotic System for total knee arthroplasty. This exclusive offering integrates ZBH technology into a customized TMINI robotic solution, complementing ZBH's ROSA Robotics portfolio.
ZBH’s trailing-12-month CAPEX / Sales of 8.19% is 128.2% higher than the industry average of 3.59%. Its trailing-12-month EBIT margin and levered FCF margin of 20.33% and 14.37% are considerably higher than the industry averages of 1.61% and 1.24%, respectively.
For the fiscal first quarter that ended March 31, 2024, ZBH’s net sales and adjusted operating profit stood at $1.89 billion and $539.40 million, up 3.2% and 3.7% year-over-year, respectively. For the same quarter, its adjusted net earnings of ZBH increased marginally over the prior-year quarter to $399.70 million. Its adjusted earnings per common share grew 2.6% from the year-ago quarter to $1.94.
Street expects ZBH’s EPS and revenue for the quarter ending June 30, 2024, to increase 9.5% and 3.9% year-over-year to $1.99 and $1.94 billion, respectively. The company surpassed consensus EPS and revenue estimates in each of the trailing four quarters.
ZBH has declined 10.2% over the past six months, closing the last trading session at $106.69. ZBH’s RSI is currently at 20.93, indicating a buy signal.
ZBH’s POWR Ratings reflect its robust prospects. It has an overall B rating, equating to Buy in our proprietary rating system.
ZBH has a B grade for Growth and Value. Within the Medical - Devices & Equipment industry, it is ranked #13 out of 132 stocks. Click here for the additional POWR Ratings of ZBH (Momentum, Stability, Sentiment, and Quality).
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
CMCSA shares were trading at $36.90 per share on Wednesday afternoon, down $0.41 (-1.10%). Year-to-date, CMCSA has declined -14.66%, versus a 15.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Neha Panjwani
From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
3 Oversold Stocks With Buy Signals StockNews.com
