After last week’s highly volatile trade action, the TSX Index closed down 1.3%. Given the volatile nature of the markets currently, it is not surprising to see many stocks enter oversold territory.
From a technical perspective, a stock is considered oversold when its 14-day relative strength index (RSI) dips below 30. When this happens, there is an opportunity for a short-term bounce.
Taking that into account, here are three stocks that closed the week in oversold territory and could be due for a rebound this week.
Formerly known as New Flyers Industries, NFI Group (TSX:NFI) has been absolutely punished in 2019. Year to date, NFI’s stock has lost 25% of its value, five per cent in the past week alone.
The company is currently working through some operational and supply chain issues. This is what has led to it missing on earnings in the first couple of quarters of the year. However, the downwards pressure appears to be over done.
NFI Group is an industry leader, manufacturing low-carbon emission buses. In our environment of climate change, demand for its products aren’t likely to go away any time soon.
Trading at only 9.62 times forward earnings and a P/E to growth (PEG) of only 0.29, NFI Group is cheap.
Bank of Montreal
The Bank of Montreal (TSX:BMO) is the only one of Canada’s Big Banks to enter oversold territory this week. With an RSI of 22.23, BMO is poised for a bounce.
Strong earnings from either of these could lead to strong showing by BMO ahead of its earnings release next week.
With an RSI of 18.99, Enerflex (TSX:EFX) is among the most oversold stocks on the TSX, and in my opinion is one of the best stocks you can own in Canada today. As a natural gas service company, it has struggled significantly over the past few months as the price of gas has hit yearly lows.
The fear is that producers will reduce CAPEX which will hurt demand for the company’s products and services. Nevertheless, investors have been presented with once-in-a-decade opportunities to pick up industry-leading companies on the cheap.
Enerflex is no exception. The company is trading at only 9.53 times forward earnings and near 52-week lows. Once the price of natural gas rebounds, Enerflex is well positioned to reward investors with double-digit growth.