In this article, we will take a look at the 10 oversold large cap stocks to buy.
The earnings season is in full flow as companies are starting to release their financial results for Q2 2023. The ongoing week is slated to bring in the financial results for hundreds of companies including 170 S&P 500 companies as well as several DJIA companies. Notable companies in the list include tech giants Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), among others.
With the earnings season almost half gone, nearly 81% of the companies that have reported their Q2 2023 results have beaten consensus estimates on EPS figures for the quarter, according to a report by Societe Generale. The EPS surprise figure is the highest since Q3 2021, while only 62% of the companies have beaten sales estimates, lower than the last quarter. The data suggests that the surprise has stemmed from improved profitability margins following cost-cutting measures implemented by a majority of the firms.
The NASDAQ-100 index, heavily weighted by the megacap technology companies, has had a brilliant resurgence this year riding fueled by the recent advancements in the artificial intelligence space. The index is up more than 45% year-to-date as of July 31, compared to nearly 38% for the NASDAQ Composite index during the same period.
Significant portion of these gains for the index can be attributed to the artificial intelligence rally which led to the tripling of graphics cards maker NVIDIA Corp (NASDAQ:NVDA) share price and more than double growth for Elon Musk’s electrical vehicle company, Tesla, Inc. (NASDAQ:TSLA) has more than doubled. This also resulted in a skewing of the index towards the performance of the megacap stocks on the index which prompted a special rebalancing for the index. You can read more about this in our article: 10 Oversold NASDAQ Stocks to Buy.
The stock markets in general have also picked up this year with the S&P 500 Index up nearly 20% since the beginning of the year, which marks one of the best seven month starts to a year since 1997. Similarly, the NASDAQ Composite Index, with more than 37% gained during the first seven months marks the best start since 1975. The resurgence of the major indices can be attributed to the slowdown of the quantitative tightening process. You can read more about this in our article: 10 Most Oversold S&P 500 Stocks Right Now.
Methodology
We used stock screeners to identify companies with market capitalizations of more than $10 billion (the generally accepted definition of large cap stocks). Then we used the 14-day Relative Strength Index (RSI) as of July 31 to rank these stocks with the lowest RSI stock taking the highest rank.
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. Note that we removed stocks with a trading volume of less than 0.5 million shares.
10 Oversold Large Cap Stocks to Buy
10. Bruker Corporation (NASDAQ:BRKR)
14-day RSI as of July 31: 31.52
Number of Hedge Fund Holders: 27
Based in Billerica, Massachusetts, Bruker Corporation (NASDAQ:BRKR) is a biotechnology company specializing in the development and manufacturing of scientific instruments and analytical and diagnostic solutions that enable its customers to explore life and materials at microscopic, molecular, and cellular levels.
On May 8, Bruker Corporation (NASDAQ:BRKR) announced the acquisition of ZONTAL Inc., an innovative platform provider for the digital transformation of analytical laboratories, and for integrated biopharma technical data solutions. Earlier in January, the company had announced the acquisition of ACQUIFER Imaging GmbH, a pioneer in big-data management solutions for bioimaging and high-content microscopy. The financial terms of the transactions were not disclosed.
On May 5, Citigroup raised the target price on Bruker Corporation (NASDAQ:BRKR) shares to $95 from $90 and maintained a ‘Buy’ rating. The target price represents a potential upside of 38.24% based on the share price on July 31.
9. Equifax Inc. (NYSE:EFX)
14-day RSI as of July 31: 31.19
Number of Hedge Fund Holders: 30
Based in Atlanta, Georgia, Equifax Inc. (NYSE:EFX) 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. (NYSE:EFX) 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. (NYSE:EFX) 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.
8. TELUS Corporation (NYSE:TU)
14-day RSI as of July 31: 30.99
Number of Hedge Fund Holders: 14
Vancouver, British Columbia-based TELUS Corporation (NYSE:TU) is a leading communications technology company serving 17 million customer connections across wireless, data, IP, voice, television, entertainment, video, and security. Its portfolio also comprises TELUS Health, TELUS Agriculture & Consumer Goods, and TELUS International.
On July 13, TELUS Corporation (NYSE:TU) announced an update to its annual guidance for FY 2023. The company reduced its operating revenue growth guidance from 11%-14% range to 9.5%-11% range and the adjusted EBITDA growth guidance from 9.5%-11% to 7%-8%.
Following the release of guidance update, multiple analysts lowered their price targets for TELUS Corporation (NYSE:TU) shares. The shares of the company currently have an average analyst price target of $22.73 which represents a potential upside of 27.77% based on the share price on July 31.
7. Lamb Weston Holdings, Inc. (NYSE:LW)
14-day RSI as of July 31: 30.62
Number of Hedge Fund Holders: 49
Eagle, Idaho-based, Lamb Weston Holdings, Inc. (NYSE:LW) 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. (NYSE:LW) 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. (NYSE:LW) 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. (NYSE:LW) has made it to our list of 10 oversold large cap stocks to buy based on its 14-day RSI. In addition to being oversold, the shares of the company were 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.
6. Kimberly Clark Corporation (NYSE:KMB)
14-day RSI as of July 31: 29.70
Number of Hedge Fund Holders: 40
Dallas, Texas-based Kimberly Clark Corporation (NYSE:KMB) is a manufacturing company providing personal care and household products including disposable diapers, baby wipes, paper towels, facial and bathroom tissues, napkins, training and youth pants, and swim pants, among others. Its portfolio includes several notable brands including Huggies, Kleenex, Andrex, Scott, Kotex, Poise, and Depend.
On July 25, Kimberly Clark Corporation (NYSE:KMB) released its financial results for Q2 2023. Its revenue increased by 1% y-o-y to $5.1 billion while net income decreased by 80% y-o-y to $86 million. It currently pays a quarterly cash dividend of $1.18 per share, 2% more than the quarterly dividends paid in the same period last year.
As of Q1 2023, 40 leading hedge funds tracked by Insider Monkey owned shares of Kimberly Clark Corporation (NYSE:KMB), valued at $909 million. Its largest shareholder was Arrowstreet Capital with ownership of 1.5 million shares valued at $201 million.
5. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
14-day RSI as of July 31: 28.91
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 (NASDAQ:WTW) 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 (NASDAQ:WTW) shares to $260 and changed the rating on the shares to ‘Outperform’ from ‘Strong Buy’.
As of Q1 2023, Willis Towers Watson Public Limited Company (NASDAQ:WTW) 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.
4. HCA Healthcare, Inc. (NYSE:HCA)
14-day RSI as of July 31: 28.44
Number of Hedge Fund Holders: 65
Founded in 1968, HCA Healthcare, Inc. (NYSE:HCA) 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. (NYSE:HCA) 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. (NYSE:HCA) 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. (NYSE:HCA) ranks #1 on our list of 10 oversold large cap stocks to buy based on the number of hedge fund shareholders as of March 31. Its shares were owned by 65 hedge funds with a total value of $2.8 billion.
3. Edwards Lifesciences Corporation (NYSE:EW)
14-day RSI as of July 31: 28.38
Number of Hedge Fund Holders: 47
Edwards Lifesciences Corporation (NYSE:EW) is a medical equipment manufacturing company providing patient-focused medical innovations for structural heart disease, as well as critical care and surgical monitoring.
Edwards Lifesciences Corporation (NYSE:EW) reported a strong quarterly performance for Q2 2023 with 11% y-o-y revenue growth to reach $1.53 billion. The company also raised FY 2023 revenue guidance from a range of $5.6-$6.0 billion to $5.9-$6.1 billion, and adjusted EPS guidance range from $2.48-$2.60 to $2.50-$2.60.
Following the earnings release, Morgan Stanley reiterated an ‘Outperform’ rating and a target price of $102 for Edwards Lifesciences Corporation (NYSE:EW) shares which represents a potential upside of 16.97% based on the share price on July 31.
2. The Hershey Company (NYSE:HSY)
14-day RSI as of July 31: 27.88
Number of Hedge Fund Holders: 44
The Hershey Company (NYSE:HSY) is a global confectionery company with product offerings including chocolate and non-chocolate confectionery products; gum and mint refreshment products and protein bars; snack items such as popcorn, pretzels, spreads, snack bites and mixes; and pantry items, such as baking ingredients, toppings, and beverages.
The Hershey Company (NYSE:HSY) sells its products under more than 100 brand names in nearly 80 countries worldwide. Some of its well-known brands include Hershey’s, Reese’s, Kisses, Cadbury, Good & Plenty, Heath, Kit Kat, Twizzlers, Whoppers and York, among others.
On July 27, the Board of Directors of The Hershey Company (NYSE:HSY) announced a quarterly cash dividend of $1.192 for the common shares of the company which represents an increase of 15% from its previous dividend amount. This marks the 374th consecutive regular dividend on the Common Stock of the company.
As of Q1 2023, 44 prominent hedge funds tracked by Insider Monkey held shares of The Hershey Company (NYSE:HSY), with a total value of $1.9 billion. Jim Simons’ Renaissance Technologies was its largest hedge fund shareholder with ownership of 2.3 million shares valued at $586 million.
1. GFL Environmental Inc. (NYSE:GFL)
14-day RSI as of July 31: 24.05
Number of Hedge Fund Holders: 21
Ontario, Canada-based GFL Environmental Inc. (NYSE:GFL) is the fourth largest diversified environmental services company in North America, offering solid waste management, liquid waste management, and soil remediation services across Canada and in more than half of the U.S. states.
GFL Environmental Inc. (NYSE:GFL) released its financial results for the Q2 2023 which showed continuation in solid performance from the previous quarter. The revenue of the company increased by 14% y-o-y to reach C$1.9 billion while net income more than tripled to C$294 million. The company also managed to achieve its target of non-core divestitures during the quarter. The gross proceeds, amounting to C$1.65 billion, were mainly used to deleverage the balance sheet.
GFL Environmental Inc. (NYSE:GFL) ranks #1 on our list of 10 oversold large cap stocks to buy based on its 14-day RSI of 24.05. The shares of the company were held by 21 hedge funds, valued at $290 million.
You may also like to read 10 Oversold Financial Stocks to Buy and 15 Worst Performing NASDAQ Stocks In 2023
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Disclosure: None. 10 Oversold Large Cap Stocks to Buy is originally published on Insider Monkey.
