Some of the most overbought and oversold stocks on Wall Street right now include Bank of America and a water treatment company. One yardstick that investors like to use to separate the most overvalued and undervalued stocks is called the “relative strength index,” which measures the speed and size of a security’s recent price changes. This can potentially signal to investors when to buy and sell a stock. A stock with a 14-day RSI higher than 70 is considered overbought, possibly signaling to investors that it may be time to start taking profits and trim their positions. Meanwhile, a stock with a 14-day RSI lower than 30 is considered oversold, a signal of poor sentiment around the firm. Investors can also take a low RSI to mean it’s time to start buying up the name. The metric can help investors choose where to start adding or cutting exposure, after the major averages wrapped up a positive week on Wall Street. According to a CNBC Pro screen of FactSet data, here are the 10 most overbought stocks in the S & P 500. Ecolab was among the most overbought stocks in the S & P 500. With a 14-day RSI of 75, the water treatment company is up more than 11% in 2023. Last month, RBC Capital Markets upgraded shares to outperform from sector perform, saying investors should take the offensive on the chemical stock. “Leadership in product chemistry and technology innovation should drive share gains, delivering record net new business pipeline,” RBC’s Ashish Sabadra wrote in a Feb. 15 notes. “We believe Water and Pest Elimination continue to be the crown jewel, while inflection in Healthcare & Life Science, along with sustained pricing momentum, should drive robust top-line growth.” Still, Ecolab has a buy rating from only about 30% of analysts covering the stock, according to FactSet. It has about 4% upside to its average price target. First Solar also made this list. The solar panel maker has a 14-day RSI of roughly 74, while about half of analysts covering the company recommend the stock. The consensus price target is roughly where the stock sits today, according to consensus estimates on FactSet. Still, UBS on Friday upgraded First Solar to buy from neutral, and raised its price target to $250 from $140. The bank said First Solar could be a main beneficiary of the Inflation Reduction Act’s manufacturing tax credits. Other overbought names include Clorox Co. and Mosaic Co. We also screened for the most oversold stocks in the benchmark stock index. Here are 10 in the table below: Bank of America is an oversold name, with a 14-day RSI level of just 8.6, according to FactSet. Roughly 40% of analysts give the bank a buy rating. Still, Wall Street expects shares could rise about 20%, based on the consensus price target. Last month, Keefe, Bruyette & Woods gave Bank of America an underperform rating, downgraded from market perform. The Wall Street firm, which specializes in financial stocks, said investors are “paying too much for defense.” “Although we view BAC as a relatively safe stock, the current premium valuation is expensive for an environment that may face more revenue risk than a severe credit downturn,” read a February note. Meanwhile, the Walt Disney Company also showed up as oversold. The stock has a 14-day RSI of 13.7. The theme park and media conglomerate is considered a buying opportunity by 74% of analysts covering Disney. As a group, they say shares can jump more than 20%. Other stocks that appear unduly beaten up include CVS Health and EPAM Systems.
