Recent market losses may present a buying opportunity for stocks including Match Group and PepsiCo , based on one popular metric. The market has had a wild ride this week. On Tuesday, the Dow Jones Industrial Average dropped 1.3% — marking its biggest one-day loss since March. The 30-stock average was up more than 300 points on Friday. The S & P 500 entered Friday’s session down for the week, but a 1% rally put it on track to snap a four-week slide. Following this week’s moves, CNBC Pro used FactSet data to screen for the most overbought and oversold names in the S & P 500 based on their 14-day relative strength index, or RSI. A stock that has a 14-day RSI greater than 70 is considered to be overbought and at risk of a pullback. A high RSI is often associated with investors getting too optimistic about a stock in the near term. Conversely, a reading lower than 30 typically means that a stock is oversold and may be ready to stage at least a short-term bounce. A low RSI usually indicates souring sentiment around a stock. Here are some of the most oversold names: PepsiCo is one of the most oversold companies in the S & P 500, scoring an RSI of 5.7 and a consensus price target implying more than 26% upside. Nearly one-third of Wall Street analysts have a buy rating on the company, which owns several brands including Gatorade, Cheetos and Aquafina. The food and beverage giant recently had its longest losing streak since 2018. Shares have declined by 12% this year and 6.4% this month alone. Barclays and JPMorgan earlier this week slashed their price targets on PepsiCo down to $179 and $188, respectively, though they maintained their overweight ratings on the stock ahead of the company’s quarterly earnings Tuesday. Match Group is another oversold name. The online dating service company has one of the highest percentage of analyst ratings, with 60% of analysts covering the stock rating it a buy. Match Group has an RSI of 6.1 with nearly 55% expected upside. Shares have slumped 10% in 2023. Some analysts think the stock’s underperformance this year presents a buying opportunity for investors. HSBC last week initiated Match Group with a hold rating and $47.10 price target. JPMorgan named it a ‘top pick’ in mid-September and increased its price target on the company, saying the online dating sector can still grow in double-digits. Home Depot is also oversold, with a 14-day RSI of 8.12. Earlier this week, JPMorgan analyst Christopher Horvers suggested that Home Depot still faces an earnings risk. “Overall, housing signals/indicators remain mixed and are tilting downward given the recent surge in mortgage rates to record levels,” he said. Still, nearly half of analysts covering the stock rate the home improvement retailer a buy, giving it a price target that suggests more than 20% upside over the next 12 months. Other oversold stocks include utility company NextEra Energy , hospitality and entertainment company MGM Resorts International and financial services firm State Street . However, some names are well overbought despite the market’s recent moves. Here are the 10 most overbought stocks in the S & P 500: Activision Blizzard made the list, with an RSI of 74.15. Microsoft is planning to close its $68.7 billion proposed acquisition of Activision Blizzard on Oct. 13, which is earlier than originally planned, according to a Friday report from The Verge. Pharmaceutical company McKesson and risk management software provider Assurant are also among the most overbought companies in the S & P 500. UnitedHealth also made the list, though it’s just outside of official overbought territory, with an RSI of 69.2. Nearly 77% of analysts covering the health care and insurance company rate it a buy, with the average price target implying 9.7% upside. Shares are down for the year, but have jumped 4% this month on last week’s announcement that the UK cleared UnitedHealth’s £1.2 billion purchase of health care software company Emis Group. Hard disk drive maker Seagate Technology is another name that’s just outside of overbought territory, with an RSI of 64.75. Just under a third of analysts rating the stock. The average price target suggests shares have a downside of 2.8%. The stock has gained more than 26% this year.
Read the full article here