Benjamin Hughes

April 5, 2024 - 17:41 pm

Potential Rebound: Investors Eye Undersold Stocks Amid Market Turbulence

In a week shadowed by market volatility, investors are actively seeking signs of recovery among the beleaguered stocks. The major stock indexes, which have recently plummeted, showed signs of resilience on Friday with the Dow Jones Industrial Average rallying in an attempt to offset its worst day since March earlier this year. Despite this effort, the indexes were on the brink of concluding the week in the red, as market participants contended with several forces dampening the investment atmosphere. These included a sudden surge in oil prices coupled with escalating concerns that the Federal Reserve may maintain elevated interest rates for an extended period.

Amid these challenging times, stock analysts are identifying potential opportunities for investors. The CNBC Pro Stock Screener Tool has been instrumental in pinpointing companies that appear oversold when assessed through the lens of the 14-day relative strength index (RSI). A stock is typically considered oversold when the RSI falls below the 30-mark, suggesting a potential buying opportunity, whereas an RSI reading above 70 could indicate that the stock is overbought and might be primed for a retracement. Amongst those making the grade is the fast-food giant McDonald's, whose shares have seen a downturn exceeding 5% this week, culminating in a near 10% drop since the dawn of 2024.

McDonald's is currently braving these tumultuous times with a 14-day RSI standing at 24.52, hinting at the stock being slightly oversold. Nevertheless, market analysts are maintaining a positive outlook for the company's shares. According to FactSet data, 67% of the polled analysts are recommending a buy or overweight rating, with their projected average price targets suggesting a potential increase of over 21%. The company has been actively pursuing growth strategies, such as amplifying its partnership with Krispy Kreme through plans to vend the confectioner's donuts at its burger outlets across the nation by the end of 2026. Furthermore, McDonald's announced its intention to acquire all 225 eateries of its Israel franchise, a significant stride in its consolidation efforts.

Another company showing promise according to the stock screen is the biopharmaceutical giant Biogen, with its RSI standing at 29.71. Biogen's shares have faced a daunting retreat, spiraling down over 21% in 2024. The slump followed after the company fell short of Wall Street's expectations for the fourth quarter, a downturn they attributed to waning sales of their multiple sclerosis treatments. Despite this adversity, Biogen remains a focal point of optimism for analysts surveyed by FactSet, 74% of whom advocate a buy or overweight rating for the stock. The projections of these analysts signal the capacity for an impressive rebound, with price targets averaging an increase of more than 45%. The company's optimistic forecast is partly fueled by expectations surrounding its potential expansion into Latin America, highlighted by Baird analyst Brian P. Skorney, where the market could embrace Biogen's spinal muscular atrophy treatment Spinraza for an estimated 2,000 to 4,000 patients.

It's not just McDonald's and Biogen catching the eyes of investors; other notable oversold entities include Starbucks and Nike. These companies are part of a broader ecosystem of stocks under recent stress potentially ripe for a bounce back, which makes them worth monitoring in the coming weeks. However, it should be emphasized that these insights do not constitute financial advice and should not be the sole basis for investment decisions. Investors must exercise due diligence and consult with financial advisors to align their choices with their unique financial circumstances and objectives.

In conclusion, despite a tumultuous period for stock markets, characterized by abrupt price escalations and hesitation regarding future monetary policies, there are select opportunities that investors with an appetite for recovery plays may consider. While the analyzed stocks like McDonald's and Biogen have been impacted by the market downturns, their current evaluation by financial experts points towards a potential period of revival.

In addition, before embarking on any form of investment, individuals should heed the disclosures and recommendations as required by law. The information presented is general in nature and is furnished solely for educational purposes. It's imperative that personal financial circumstances be the guiding light for any investment decisions, and acquiring personalized advice from financial or investment advisors is strongly recommended.

Click here for more information on McDonald's stock Read more about Biogen's financial performance

As the world of investments continues to evolve with market fluctuations, those opportunistic plays highlighted here will remain under scrutiny. It's yet to be seen if these stocks will indeed bounce back as analysts predict, but the numbers suggest a hopeful future for investors willing to take a calculated risk.

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