When stocks get beaten down hard enough, they sometimes become interesting again. That's the basic idea behind hunting for oversold opportunities in the financial sector, where a handful of names have taken such a beating that their technical indicators are flashing potential buy signals.
The Relative Strength Index, or RSI, is a momentum indicator that measures how stocks perform on up days versus down days. Think of it as a way to gauge whether a stock has been sold off too aggressively. When the RSI dips below 30, the conventional wisdom says an asset is oversold and might be due for a bounce. It's not a crystal ball, but it gives traders a sense of short-term momentum and potential turning points.
Right now, three financial stocks are sitting in that oversold territory, presenting what could be compelling entry points for investors willing to bet on a rebound. Here's what you need to know about each one.
Fiserv Inc. (FISV)
Fiserv has had a brutal six months, with shares plummeting around 62% and hitting a 52-week low of $59.56. That's the kind of decline that makes you wonder if something fundamentally broke or if the market just got carried away.
On December 31, Tigress Financial analyst Ivan Feinseth maintained his Buy rating on the stock, though he did slash his price target from $250 down to $95. That's a massive haircut on the target, but the Buy rating suggests Feinseth still sees value here even after the carnage.
RSI Value: 28.8
Price Action: Shares of Fiserv fell 2.4% to close at $65.59 on Friday.
Edge Stock Rating: Value at 38.19.
Paymentus Holdings Inc. (PAY)
Paymentus hasn't suffered quite as dramatic a collapse as Fiserv, but it's still been a rough ride. The stock is down about 19% over the past month and recently touched a 52-week low of $22.65.
On December 4, JP Morgan analyst Tien-Tsin Huang maintained a Neutral rating on Paymentus while raising his price target from $35 to $38. The Neutral stance suggests some caution, but the upward revision to the target hints that even the skeptics see a bit more upside from current levels.
RSI Value: 25.5
Price Action: Shares of Paymentus dropped 9.9% to close at $28.47 on Friday.
Walker & Dunlop, Inc. (WD)
Walker & Dunlop rounds out the trio with a more modest decline of about 7% over the past month, though it has also hit a 52-week low of $58.63. The company operates in commercial real estate finance, a sector that's faced its share of headwinds lately.
On December 19, Jefferies analyst Matthew Hurwit initiated coverage on Walker & Dunlop with a Buy rating and set a price target of $75. That represents meaningful upside from current levels and suggests fresh optimism about the company's prospects.
RSI Value: 24.8
Price Action: Shares of Walker & Dunlop fell 2.4% to close at $58.72 on Friday.
All three of these stocks are deeply oversold by RSI standards, and each has at least some analyst support suggesting the selloff may have gone too far. Of course, oversold doesn't automatically mean "buy now." Stocks can stay oversold longer than you'd expect, especially if there are legitimate fundamental concerns driving the weakness. But for investors with a tolerance for volatility and an eye for potential turnarounds, these names are worth watching closely. Sometimes the best opportunities emerge when everyone else has given up and walked away.
