These three stocks are oversold and primed for major gains
Stocks pulled back slightly on Friday heading into a long holiday weekend, but at least three individual stocks look so bad they may be good: all three are oversold and could soon be due to rally, if only a technical basis. After hitting a new intraday record high on Thursday, the S & P 500 fell on Friday to ultimately end the week down 0.1%. The Dow Jones Industrial Average and Nasdaq Composite each shed 0.2%. For the month as a whole, however, the major stock averages all ended higher, an impressive feat considering that August has historically been a seasonally weak month. Investors are looking forward to a September rate cut from the Federal Reserve, with the CME FedWatch Tool showing an 87% probability of the U.S. central bank lowering rates at its next meeting, based on interest rate futures trading. CNBC Pro used its stock screener tool to identify the most oversold and overbought stocks on Wall Street as measured by their 14-day relative strength index, or RSI. Stocks with a 14-day RSI below 30 are considered oversold, meaning that that they might soon be due for a bounce. Conversely, a reading above 70 signals that a stock may be overbought, indicating a potential pullback ahead. Soft drink and coffee maker Keurig Dr Pepper , with an RSI of 29, is among the most oversold stocks on Wall Street. Shares ended the week down more than 17% after sliding 11% on Monday when it said it will buy Dutch coffee company JDE Peet’s in an $18 billion deal. The average analyst price target now implies potential upside of 29% ahead, based on the latest LSEG data as of Friday’s open. Keurig Dr Pepper’s takeover, set for the first half of 2026, is expected to generate $400 million in cost synergies over three years. After the deal, Keurig Dr Pepper plans to split its beverage and coffee units into two separate, publicly-traded businesses. After the acquisition news, HSBC downgraded the stock to a hold rating from buy, saying the deal was too expensive. “KDP announced the effective undoing of its 2018 merger of Keurig and Dr Pepper, for excellent reasons,” said analyst Sorabh Daga. “We don’t think KDP needed to lever itself up to 6-8x net debt/reported EBITDA to exit the Keurig coffee business.” Similarly, investors are overwhelmingly bearish on Charter Communications , which ended the week down more than 4%. Late last month, Bernstein upgraded the owner of the Spectrum internet service to outperform from market perform, citing a discounted valuation. “When something is cheap, it’s cheap for a reason. For CHTR, it’s the secular challenges that seem to stretch further with each earnings call, and this one certainly didn’t help. But as we reflect in the summer heat on what’s shaping up to be a tough 2H, we are looking ahead to CHTR’s narrative for ’26,” Bernstein analyst Laurent Yoon wrote. “July is nearly behind us, and this unusual heat, too, will pass.” Charter’s average price target implies that the shares could potentially soar 54% from current levels. Hormel Foods was the third oversold stock after it tumbled 13% Thursday in reaction to disappointing fiscal third quarter results. On the flip side, Deckers Outdoor is among the most overbought stocks, with an RSI of 71. In the week just ended, the maker of of Ugg, Hoka and Teva boost and footwear rose almost 10%. On Friday, UBS reiterated its buy rating for the stock and raised its 12-month price target to $158, corresponding to a 33% rally from Deckers’ recent close. “We see a very good opportunity to buy shares in a growth company currently significantly undervalued by the market. We expect DECK’s EPS to positively surprise over the coming quarters due to strong sales growth from both HOKA and UGG,” wrote analyst Jay Sole. Analysts’ consensus price target on Deckers is roughly 8% above the stock’s current price. Casino operator Wynn Resorts clocked in as overbought with an RSI of 77. Shares popped 11% this week. On Thursday, UBS upgraded gaming stock to a buy rating from neutral, citing Wynn’s expanding global footprint. Analyst Robin Farley was especially bullish on Wynn’s Al Marjan resort in the United Arab Emirates. “We anticipate that WYNN being the only gaming operator in the UAE should provide a meaningful head start in capturing loyalty among ultra high net worth international customers,” the analyst wrote.
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