The stock markets have been through the wringer in the recent past especially since March 2022 as the United States Federal Reserve began its tightening process. Despite that, major stock indices in the United States have already recuperated some of their losses in the recent past. The S&P 500 Index is up 3.07% in July and nearly 20% since the beginning of the year. Similarly, the Dow Jones Industrial Average and the NASDAQ-100 indices are up 7.1% and 45.1% year-to-date, respectively.
Several factors, including major breakthroughs in the Artificial Intelligence arena, a pause in interest rate hikes, better than expected inflation results, and resilient economic growth. The latest economic data shows that the United States economy grew at an annualized rate of 2.4% in Q2 2023, nearly a full percentage point more than consensus estimates.
After a streak of 10 consecutive interest rate hikes over the period of 14 months by the United States Federal Reserve, the Fed kept the interest rate unchanged in its June meeting. On July 26, the Fed announced a further 25 bps interest rate hike which brings the funds rate to a target range of 5.25%-5.5%. This marks the benchmark rate at its highest level since 2001.
The comments of Fed Chairman Jerome Powell at a press conference generated mixed results for the equities markets. Even though policymakers indicated the possibility of two rate hikes by the end of the year, in their June meeting, Powell’s comments have raised hopes for just the one interest rate hike this year. The Fed Chairman affirmed that the central bank intends to make data-driven decisions concerning any further rate hikes on a “meeting-by-meeting” basis.
Jerome Powell said in his press conference on July 26:
“I would say it’s certainly possible that we will raise funds again at the September meeting if the data warranted. And I would also say it’s possible that we would choose to hold steady and we’re going to be making careful assessments, as I said, meeting by meeting.”
The S&P 500 index is highly concentrated this year, with the highest weightage of the five largest holdings since 1990. Companies involved in the AI landscape are playing an important role in uplifting the index. You can read more about the top constituents of the index and their weightages in our recently published article: Top 30 S&P 500 Stocks by Index Weight
Our list of 10 most oversold S&P 500 stocks right now includes leading companies across multiple sectors, including leading global food processing company Lamb Weston Holdings, Inc. (NYSE:LW), data analytics company Equifax Inc. (NYSE:EFX), aerospace and defense giant Raytheon Technologies Corporation (NYSE:RTX), and health care facilities operator HCA Healthcare, Inc. (NYSE:HCA), among others.
Methodology
For this article, we compiled a list of 10 most oversold S&P 500 stocks right now with the lowest 14-day Relative Strength Index (RSI) as of July 28. The Relative Strength Index is a technical indicator that tracks momentum changes in stock prices. It was developed by J. Welles Wilder, and it is calculated by determining the mean of gains and losses of a stock in the last 14 days. An RSI above 70 implies that a stock is overbought and below 30 implies that it is oversold. These levels can be adjusted if needed. The stocks in this article are listed in descending order of their RSI.
10 Most Oversold S&P 500 Stocks Right Now
10. Rollins, Inc. (NYSE:ROL)
14-day RSI as of July 28: 30.38
Number of Hedge Fund Holders: 36
Rollins, Inc. (NYSE:ROL), based in Atlanta, Georgia, is a global consumer and commercial services company providing essential pest control services and protection against termite damage, rodents, and insects to more than 2.8 million customers across the globe.
On July 26, Rollins, Inc. released its financial results for Q2 2023. Its revenues increased by 15% y-o-y to $821 million, while net income increased by 8% y-o-y to $110 million. At $0.23, the normalized EPS for the quarter missed consensus estimates by $0.01.
Rollins, Inc. has paid regular quarterly dividends for more than two decades. On July 25, its Board of Directors declared its latest regular quarterly cash dividend of $0.13 per share which represents a 30% increase from the dividend paid in the same quarter last year.
Earlier on April 5, Rollins, Inc. completed the acquisition of FPC Holdings, LLC, a leading Utah-based pest management company in a transaction valued at $350 million which includes $32 million of contingent payments based on future profitability.
9. Biogen Inc. (NASDAQ:BIIB)
14-day RSI as of July 28: 30.33
Number of Hedge Fund Holders: 67
Cambridge, Massachusetts-based Biogen Inc. (NASDAQ:BIIB) is a leading biotechnology company focused on the discovery and development of innovative therapies for serious neurological and neurodegenerative diseases. It also manufactures and commercializes biosimilars of advanced biologics.
The portfolio of Biogen Inc. includes a broad range of medicines to treat multiple sclerosis, the first approved treatment for spinal muscular atrophy, and two co-developed treatments to address a defining pathology of Alzheimer’s disease.
On July 28, Biogen Inc. announced that it had entered into a definitive agreement to acquire Reata Pharmaceuticals, Inc. (NASDAQ:RETA) in a cash transaction that values the company at $7.3 billion. Reata’s FDA-approved SKYCLARYS® is the first and only approved treatment for Friedreich’s ataxia in the United States.
As of March 31, Biogen Inc. shares were owned by 67 hedge funds with a total value of $3.2 billion which makes it the most commonly held stock out of the 10 stocks that have made it onto our list of most oversold S&P 500 stocks right now.
8. Juniper Networks, Inc. (NYSE:JNPR)
14-day RSI as of July 28: 30.30
Number of Hedge Fund Holders: 33
Sunnyvale, California-based Juniper Networks, Inc. (NYSE:JNPR) designs, develops, and sells products and services for high-performance networks including routing, switching, Wi-Fi, network security, artificial intelligence (“AI”) or AI-enabled enterprise networking operations (“AIOps”), and software-defined networking (“SDN”) technologies.
Juniper Networks, Inc. delivered strong results in Q2 2023 with revenue up nearly 13% on a year-on-year basis. It generated $1.4 billion in net revenue and $24.4 million in net income for the quarter. The company also announced a cash dividend of $0.22 per share.
As of Q1 2023, Juniper Networks, Inc. shares were held by 33 hedge funds with a total value of $448 million. Ken Griffin’s Citadel Investment Group was its largest hedge fund shareholder with ownership of 2.7 million shares valued at $93 million.
7. Raytheon Technologies Corporation (NYSE:RTX)
14-day RSI as of July 28: 30.26
Number of Hedge Fund Holders: 48
Arlington, Virginia-based Raytheon Technologies Corporation is one of the world’s largest aerospace and defense companies with a market capitalization of more than $129 billion and FY 2022 revenue of $67 billion.
On July 25, Raytheon Technologies Corporation released its financial results for Q2 2023. Its revenue increased by 12% y-o-y to $18.3 billion, while its net income increased by 2% y-o-y to $1.3 billion. The normalized EPS for the quarter was $1.29, which exceeds consensus estimates by $0.11.
Raytheon Technologies Corporation has paid regular cash dividends on its common stock since 1936. On June 5, the company’s Board of Directors declared a quarterly cash dividend of $0.59 per common share.
6. Omnicom Group Inc. (NYSE:OMC)
14-day RSI as of July 28: 30.10
Number of Hedge Fund Holders: 30
Omnicom Group Inc. (NYSE:OMC) is a leading global marketing and corporate communications company providing advertising, strategic media planning and buying, digital and interactive marketing, direct and promotional marketing, public relations, and other specialty communications services to over 5,000 clients in more than 70 countries.
On July 18, Omnicom Group Inc. released its financial results for Q2 2023. Its revenue increased by 1% y-o-y to $3.6 billion, while its net income increased by 5% y-o-y to $366 million. The EPS for the quarter was $1.82, which exceeds consensus estimates by $0.04.
On July 27, Omnicom Group Inc. announced the acquisition of Outpromo and Global Shopper, two of Brazil’s leading connected commerce and retail media agencies, in a bid to create a foundation for an end-to-end e-commerce and retail media performance agency in the Brazilian market for the company.
Like other stocks such as HCA Healthcare, Inc., Juniper Networks, Inc., and Lamb Weston Holdings, Inc., Omnicom Group Inc. is among the most oversold S&P 500 stocks right now.
5. Verisign, Inc. (NASDAQ:VRSN)
14-day RSI as of July 28: 29.33
Number of Hedge Fund Holders: 37
Verisign, Inc. (NASDAQ:VRSN), based in Reston, Virginia, is a leading global provider of domain name registry services and internet infrastructure. It enables the security, stability, and resiliency of key internet infrastructure and services, including providing root zone maintainer services, operating two of the 13 global internet root servers, and providing registration services.
Verisign, Inc. recorded another solid quarterly performance in Q2 2023 with revenue up by 6% y-o-y to $372 million and net income up by 11% y-o-y to $186 million. The Board of Directors of the company also approved an additional $1.14 billion share repurchase authorization which brings the total amount of authorized share repurchase program to $1.5 billion.
As of Q1 2023, 37 of the 943 hedge funds tracked by Insider Monkey owned shares of Verisign, Inc., valued at $4.6 billion. Its largest hedge fund shareholder was Warren Buffett’s Berkshire Hathaway with ownership of 12.8 million shares valued at $2.7 billion.
4. Equifax Inc. (NYSE:EFX)
14-day RSI as of July 28: 29.00
Number of Hedge Fund Holders: 30
Based in Atlanta, Georgia, Equifax Inc. is a leading data analytics and technology company that provides credit reporting, risk assessment, and identity verification services with operations in 24 countries across North America, Central and South America, Europe, and the Asia Pacific region.
Equifax Inc. has been on an acquisition spree as part of its 2025 growth priorities. On February 19, the company announced an agreement to acquire the second largest credit bureau in Brazil, Boa Vista Serviços (BOAS3:SAO) in a transaction valuing the target company at $596 million. The transaction marked the 14th acquisition that the company had signed or completed in the 24 months up till February, totaling $4.1 billion.
Equifax Inc. has paid cash dividends for more than 100 consecutive years. On May 4, the Board of Directors of the company declared a quarterly dividend of $0.39 per share which represents a dividend yield of 0.77% based on the share price on July 28.
3. HCA Healthcare, Inc. (NYSE:HCA)
14-day RSI as of July 28: 28.84
Number of Hedge Fund Holders: 65
Founded in 1968, HCA Healthcare, Inc. is a leading healthcare provider. It owns and operates 182 hospitals and approximately 2,300 ambulatory sites of care, including surgery centers, free standing emergency rooms, urgent care centers and physician clinics in 20 states and the United Kingdom.
On July 27, HCA Healthcare, Inc. released its financial results for Q2 2023 which showed a solid performance. Its revenue increased by 7% y-o-y to $15.9 billion while net income increased by 2% y-o-y to $1.4 billion. At $4.29, its normalized EPS for the quarter surpassed consensus estimates by $0.05.
Earlier on May 18, HCA Healthcare, Inc. had announced an agreement to acquire 41 urgent care centers in Texas from FastMed to augment its existing urgent care operations in the state. Terms of the transaction were not disclosed.
HCA Healthcare, Inc. ranks 2nd on our list of 10 most undersold S&P 500 stocks right now based on the hedge fund shareholders as of March 31. Its shares were owned by 65 hedge funds with a total value of $2.8 billion. With ownership of 4.9 million shares valued at $1.3 billion, Harris Associates was the largest hedge fund shareholder.
2. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
14-day RSI as of July 28: 24.75
Number of Hedge Fund Holders: 42
London-based Willis Towers Watson Public Limited Company (NASDAQ:WTW), is a leading global advisory, broking and solutions company that provides data-driven, insight-led solutions in the areas of people, risk, and capital.
On May 18, the Board of Directors of Willis Towers Watson Public Limited Company approved a regular quarterly cash dividend of $0.84 per share which represents a 1.61% dividend yield based on the share price on July 28.
On July 28, Raymond James lowered the price target on Willis Towers Watson Public Limited Company shares to $260 and changed the rating on the shares to ‘Outperform’ from ‘Strong Buy’. The target price represents a 24.34% potential upside based on the share price on 28 July.
As of Q1 2023, Willis Towers Watson Public Limited Company shares were held by 42 hedge funds. First Eagle Investment Management was the largest hedge fund shareholder with ownership of 4.9 million shares valued at $1.1 billion.
1. Lamb Weston Holdings, Inc. (NYSE:LW)
14-day RSI as of July 28: 23.77
Number of Hedge Fund Holders: 49
Eagle, Idaho-based, Lamb Weston Holdings, Inc. is a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers around the world. Its products are sold in more than 100 countries worldwide.
On February 28, Lamb Weston Holdings, Inc. completed the acquisition of the remaining 50% stake in its European joint venture with Meijer Frozen Foods B.V. for a €525 million cash and €175 million stock consideration. The acquisition adds five additional manufacturing facilities to the company’s footprint worldwide.
On July 20, Barclays raised the price target on Lamb Weston Holdings, Inc. shares to $125 from $120 and maintained an ‘Equal Weight’ rating for the shares. The target price represents a potential upside of 22.45% based on the share price on July 28.
Lamb Weston Holdings, Inc. has made it to the top of our list of 10 most oversold S&P 500 stocks right now based on its 14-day RSI. In addition to being oversold, the shares of the company were also favored by some of the leading hedge funds. As of March 31, the stock featured in the portfolios of 49 of the 943 hedge funds tracked by Insider Monkey with the total value of shares held by these hedge funds amounting to $2.4 billion.
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This article is originally published at Insider Monkey.
