When stocks get hammered hard enough, they sometimes become interesting. That's the basic logic behind hunting for oversold names in the real estate sector, where a handful of companies have been taking it on the chin lately.
The Relative Strength Index, or RSI, is one of those momentum indicators that compares a stock's performance on up days versus down days. Think of it as a temperature gauge for whether a stock has been running too hot or too cold. The conventional wisdom says when RSI drops below 30, an asset is oversold and might be due for a bounce. Of course, sometimes stocks are cheap for a reason, but oversold readings at least flag names worth investigating.
Here are three real estate stocks that have gotten particularly beaten up recently, each sporting RSI readings that suggest the selling might have gotten overdone.
Invitation Homes Inc (INVH)
Invitation Homes Inc. (INVH) has had a rough go of it lately. The stock dropped about 5% over a five-day stretch and is now trading near its 52-week low of $26.64. On November 25, Barclays analyst Richard Hightower maintained an Overweight rating on the company but lowered his price target from $37 to $34. That's not exactly a vote of confidence in the near-term trajectory, even if he still thinks the stock is worth owning long-term.
RSI Value: 28.6
INVH Price Action: Shares of Invitation Homes fell 1.8% to close at $26.66 on Monday.
The stock carries a momentum score of 17.26 and a value score of 50.74, reflecting its current weakness but mixed valuation picture.
WP Carey Inc (WPC)
WP Carey Inc. (WPC) got hit with a downgrade on December 8, when RBC Capital analyst Brad Heffern moved the stock from Outperform to Sector Perform while keeping his price target at $69. The shares fell roughly 3% over five days and have been flirting with their 52-week low of $52.91.
RSI Value: 29.3
WPC Price Action: Shares of WP Carey fell 1.8% to close at $65.15 on Monday.
The recent downgrade signals that at least one analyst thinks the easy gains have been made, but with an RSI just below 30, the stock is sitting in territory where contrarian buyers often start circling.
Regency Centers Corp (REG)
Regency Centers Corp. (REG) rounds out this trio of battered real estate names. On December 4, Keybanc analyst Todd Thomas downgraded the stock from Overweight to Sector Weight, removing his bullish stance entirely. The shares dropped about 4% over the following five days and now trade not far above the 52-week low of $63.44.
RSI Value: 29.8
REG Price Action: Shares of Regency Centers fell 1.2% to close at $67.87 on Monday.
With an RSI sitting just under 30, Regency Centers is displaying classic oversold characteristics. Whether that translates into an actual buying opportunity depends on whether you think the recent analyst pessimism is justified or overdone.
The common thread here is pretty obvious: all three stocks have faced recent analyst downgrades or price target cuts, all three have declined meaningfully in the past week, and all three are showing technical signals that suggest the selling pressure might be reaching an extreme. That doesn't guarantee a bounce, but it does mean these names deserve a closer look from investors hunting for potential value in beaten-down corners of the market.
