When stocks get hammered hard enough, technical indicators start flashing signals that contrarian investors love to see. The Relative Strength Index, or RSI, is one of those momentum indicators that can tell you when a stock might be due for a bounce. It compares a stock's performance on up days versus down days, and when that reading drops below 30, traders typically consider the asset oversold. Translation: it might be trading below its fair value, at least in the short term.
Right now, the consumer discretionary sector has a few names sitting in deeply oversold territory. These stocks have taken a beating recently, but that same weakness could present an opportunity for investors willing to bet on a reversal. Here are three consumer stocks with RSI readings near or below 30 that could be worth watching this month.
Coursera Slides After Merger News
Coursera Inc. (COUR) has had a rough stretch lately, with shares dropping around 17% over the past month. The online learning platform announced on December 17 that it signed an all-stock merger agreement with Udemy, combining two major players in the digital education space.
"We're at a pivotal moment in which AI is rapidly redefining the skills required for every job across every industry. Organizations and individuals around the world need a platform that is as agile as the new and emerging skills learners must master," said Greg Hart, CEO of Coursera. "By combining the highly complementary strengths of Coursera and Udemy, we will be in an even stronger position to address the global talent transformation opportunity, unlock a faster pace of innovation, and deliver valuable experiences and outcomes for our learners and customers. Together, we will ensure our millions of learners, thousands of enterprise, university, and government customers, and expert instructors have a platform to keep pace with technology acceleration."
Despite the strategic rationale, investors weren't thrilled. The stock has slumped to a 52-week low of $5.76 and now sports an RSI of just 19.8, making it one of the most oversold stocks in the sector. Shares closed at $6.55 on Tuesday after falling 10.6%. The stock carries a momentum score of 7.97, according to market data.
Udemy Gets Downgraded Amid Merger Talks
The other half of that merger equation, Udemy Inc. (UDMY), hasn't fared much better. On January 13, Keybanc analyst Devin Au downgraded Udemy from Overweight to Sector Weight, pulling back his bullish stance on the stock. The timing wasn't great—shares have fallen roughly 10% over the past five days alone.
Udemy now trades near its 52-week low of $4.86 and has an RSI of 28.2, firmly in oversold territory. Shares dropped 12% on Tuesday to close at $5.12. The sharp decline reflects uncertainty around how the merger will play out and whether the combined entity can deliver on its growth promises. Market data tools have flagged the downward trend in the stock, with technical indicators pointing to significant selling pressure.
ThredUp Tumbles Despite Bullish Rating
ThredUp Inc. (TDUP), the online resale marketplace for secondhand clothing, has also taken a hit recently. The stock fell about 25% over the past month, bringing it down to a 52-week low of $1.66. Despite the weakness, Telsey Advisory Group analyst Dana Telsey maintained an Outperform rating on December 9 with a $12 price target, suggesting she sees significant upside from current levels.
ThredUp's RSI sits at 29.8, just barely above the oversold threshold. Shares declined 2.9% on Tuesday to close at $5.94. Market data signals have indicated a potential breakout pattern forming in the stock, which could be interesting for traders looking for a reversal setup. The question is whether ThredUp can stabilize and start climbing back toward that $12 price target, or if further downside is ahead.
What It Means for Investors
Oversold conditions don't guarantee that a stock will bounce back immediately. They just signal that selling pressure has been intense and that a stock might be due for at least a short-term relief rally. For these three consumer discretionary names, the technical setup suggests they're trading at levels that could attract bargain hunters.
Of course, there are reasons these stocks got oversold in the first place. Coursera and Udemy are navigating a complex merger that investors are still trying to price in. ThredUp operates in a competitive resale market where growth has been harder to come by. But for investors with a contrarian streak, oversold stocks sometimes offer asymmetric risk-reward opportunities—especially when the underlying business fundamentals remain intact.
Whether these stocks rocket higher this month depends on a lot of factors beyond just RSI readings. But if you're hunting for potential turnaround plays in the consumer sector, these three names are worth keeping on your radar.
