The slumbering bear market of 2022 has been rough on all sectors (except the energy sector) and most individual stocks.
The silver lining, however, is that the shares of a lot of fundamentally sound companies are on sale. Names that have fallen out of favor with the market yet still have solid balance sheets and growth outlooks are calling long-term investors.
Here we focus on oversold companies that not long ago were trading over $100 a share and are likely to recover in due time. It won’t be long before these three stocks return to the century mark—and then some.
Is The Walt Disney Company Stock Oversold?
Earlier this month, The Walt Disney Company (NYSE: DIS) slipped to a post-pandemic low of $90.23. It is trading approximately $10 away from its March 2020 bottom, an absurd proximity that has virtually discredited the reopening of theme parks and a booming streaming business.
From a technical perspective, Disney is arguably more oversold than it was during the Covid outbreak. Using the 10,000-foot view provided by the monthly chart, the relative strength indicator (RSI) is a paltry 18. Not only is this well below the 44 RSI reading from March 2020, but the lowest the indicator has dipped since 1999. This, plus a Bollinger Band indicator that is at its most depressed level since 2009, point to historic oversold conditions.
In recent days, Disney has started to rebound alongside the current market rally. If the market can continue to celebrate good retail sales data and worry less about a recession, the $90 level could be the bottom. With the exception of China, theme park traffic is on the rise and Disney+ subscriber growth continues to impress. Yes, the company is ramping up its spending on streaming expansion and new rides, but it will be money well spent on two businesses experiencing positive momentum.
Is Exxon Mobil Stock a Buy?
Exxon Mobil Corporation (NYSE: XOM) climbed to an all-time high last month thanks to the spike in crude oil prices. Since then, oil prices have come down mainly on fears of a recession and the potential impact on demand. Exxon Mobil shares have also experienced a sharp correction, but there’s reason to believe the longer-term trend is upward.
For one, the supply side of the oil price equation hasn’t budged much. Global crude supplies continue to be tight amid Russia-Ukraine constraints and months-long outages in Libya. And despite President Biden’s pledge to boost domestic oil supplies, there has been little effect on crude inventories and little relief for consumers at the pumps.
In the near-term, a possible recession, China Covid lockdowns, and proposals to cap the price of Russian oil threaten to weigh on crude prices and thereby Exxon’s profits. But these should amount to temporary pressures that ultimately get overpowered by global energy demand tied to the economic recovery.
Over the last three weeks, a perfect eight of eight Wall Street analysts have called Exxon Mobil a buy. All price targets are north of $100 and half are $120 and above. Investors that missed the run to $105.57 should pounce on this short-term oil slick.
Will Advanced Micro Devices Stock Recover?
The share price of Advanced Micro Devices, Inc. (NASDAQ: AMD) has been halved since it soared above $160 in November 2021. During the same period, the company has improved its competitive positioning in the rebounding semiconductor space. This is primarily because the recently acquired Xilinx has given AMD a more comprehensive solution for data center servers, allowing it to go head to head with Intel and NVIDIA.
The integration of Xilinx has yet to be fully appreciated by the market. Although AMD’s first quarter results included roughly six weeks of Xilinx sales, we’ve yet to see the full impact of the business. After all, it is a big reason why management doubled its full-year revenue growth forecast to 60%.
But with the technology sector in selloff mode, the bright outlook and Xilinx momentum have thus far gone unnoticed. AMD may get the last laugh though when it flashes the benefit of having a full quarter of Xilinx in the fold during its August 2nd report. Until then, look for the stock to trend upward as investors seek out oversold, fast-growing tech names.
Last week, a half dozen analysts gave AMD buy ratings with price targets in the $99 to $130 range. The stock is starting to move off its bottom and at 19x trailing earnings is trading at half the average P/E of the semiconductor industry.