When the most oversold stocks in the financial sector start presenting an opportunity to buy into undervalued companies, investors eager to capitalize on a rising trend should take note. The relative strength index (RSI), a momentum indicator that compares a stock’s strength on days when prices go up to its strength on days when prices go down, serves as a vital tool in spotting undervalued stocks. An asset is typically considered oversold when the RSI is below 30, a strong signal that the stock may be undervalued and due for a surge. These undervalued financial stocks are setting the stage for potential gains in the coming quarter.
Ellington Financial Inc. (EFC)
- On December 12, Ellington Financial Inc. gained shareholder approval for a merger with Arlington Asset Investment, a move set to magnify its position. With a sluggish stock performance over the past month, marked by a 3% decrease, and a 52-week low of $10.82, Ellington Financial seems ripe for a rebound.
- RSI Value: 29.54
- EFC Price Action: Shares of Ellington Financial edged up 0.2% to close at $12.72 on Thursday.
Hywin Holdings Ltd. (HYW)
- December 1 saw Hywin Holdings forming a strategic partnership agreement with Tencent Cloud for digital transformation, indicating a strategic move to reposition itself in the market. The company’s stock took a nosedive of around 77% over the past month, hitting a 52-week low of $1.2620.
- RSI Value: 6.13
- HYW Price Action: Shares of Hywin Holdings fell 4.3% to close at $1.3401 on Thursday.
Potential investors should keep a close eye on the trajectory of these companies, as they may be poised to rebound on the back of their current undervaluation. It is expected that these companies may experience a resurgence in the coming quarter, and wise investors will likely be well-positioned to realize significant gains.