In this article, we will take a look at the 11 oversold blue chip stocks to buy right now. To skip our analysis of the recent trends and market activity, you can go directly to see the 5 Oversold Blue Chip Stocks to Buy Right Now.
The S&P 500 Index, widely regarded as the leading index for large-cap equities listed on United States stock exchanges, is up nearly 10.8% year-to-date and 29.7% during the past twelve months. The rally, that started in late October, is supported by investor optimism about potential interest rate cuts in 2024 as the Federal Reserve’s battle to control inflation seems to be bearing fruit. The optimism has been further bolstered by the dovish outlook presented by the Federal Reserve in its latest meeting conducted earlier this month which maintained its view of three interest rate cuts by the end of the year.
To recap, the Federal Reserve rapidly increased the interest rates beginning from near zero before March 2022 to the current 5.25%-5.50% range, the highest benchmark rate in the country in 22 years. This led to the failure of several banks in the United States, including the collapse of Silicon Valley Bank with $209 billion assets, and Signature Bank with $110 billion assets, in March, and First Republic Bank with $229 billion assets in May 2023.
Even though several megacap stocks, including several “Magnificent Seven” stocks that played a significant role in the bull run during the latter half of 2023, have continued to perform well, some of the megacap stocks have hit a snag and are in the red in terms of year-to-date performance. Apple Inc. (NASDAQ:AAPL), sitting in the middle of our list of 11 oversold blue chip stocks to buy right now, has gone down nearly 11% year-to-date as the company faces pressure from antitrust regulators and demand concerns in China.
Another magnificent seven component, Elon Musk’s electric vehicle maker, Tesla, Inc. (NASDAQ:TSLA), is also facing pressure as its stock has plummeted nearly 29.2% year-to-date based on electric vehicle demand concerns.
In addition to suffering from macroeconomic and industry-wide market adversity, the stocks on our list of 11 oversold blue chip stocks to buy right now have suffered from individual negative catalysts as well. For instance, McDonald’s Corporation (NYSE:MCD), one of the biggest fast food chains in the world, is facing demand destruction across its overseas operations as it faces boycott campaigns in relation to the Israel-Hamas conflict in the middle east as well as macroeconomic pressure in China.
Another stock that has made it onto our list of 11 oversold blue chip stocks to buy right now is the leading aircraft maker, The Boeing Company (NYSE:BA), which has been a part of news headlines for the wrong reasons. In January, a Boeing 737 MAX 9 aircraft, operated by Alaska Airlines took off from Portland, Oregon and had to make an emergency landing as a piece of fuselage tore off the left side of the jet. There are more than 200 aircraft of the same category that have been delivered by the company. The safety crisis led to significant criticism and ultimately resulted in major shake ups in the top leadership of the company.
A close up shot of a stock ticker reflecting the performance of Indian equity markets.
Methodology
To create our list of 11 oversold blue chip stocks to buy right now, we compiled a list of stocks with more than $50.0 billion in market capitalization with the lowest 14-day Relative Strength Index (RSI).
The Relative Strength Index is a technical indicator that tracks momentum changes in stock prices. It was developed by J. Welles Wilder, and it is calculated by determining the mean of gains and losses of a stock in the last 14 days. An RSI above 70 implies that a stock is overbought and below 30 implies that it is oversold. These levels can be adjusted if needed. The stocks in this article are listed in descending order of their RSI.
Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11. Amgen, Inc. (NASDAQ:AMGN)
14-day RSI: 37.92
Number of Hedge Fund Holders: 69
Thousand Oaks, California-based Amgen, Inc. (NASDAQ:AMGN) is a leading biotechnology company discovering, developing, manufacturing, and delivering innovative human therapeutics with a focus on areas of high unmet medical need.
On February 6, Amgen, Inc. (NASDAQ:AMGN) released its financial results for the Q4 2023. Its revenues increased by 20% y-o-y to $8.2 billion, while it generated a net income of $767 million. The normalized EPS for the quarter was recorded at $4.71, which surpassed the consensus by $0.12.
Earlier on October 6, 2023, Amgen, Inc. (NASDAQ:AMGN) completed the acquisition of Horizon Therapeutics plc in an all-cash transaction implying an equity value of nearly $27.8 billion. The acquisition strengthened the company’s inflammation portfolio by adding first-in-class, early-in-lifecycle medicines which treat rare inflammatory diseases.
10. Novartis AG (NYSE:NVS)
14-day RSI: 37.75
Number of Hedge Fund Holders: 28
Basel, Florida-based Novartis AG (NYSE:NVS) focuses on the discovery, development, manufacture and marketing of prescription and generic pharmaceutical products and eye care products.
On February 6, Novartis AG (NYSE:NVS) announced that it has entered into an agreement to acquire MorphoSys AG (NASDAQ:MOR) in a transaction implying a total value of €2.7 billion. The transaction expands and complements the company’s pipeline in oncology and enhances its global footprint in hematology.
On February 23, BMO Capital analyst Etzer Darout initiated coverage of Novartis AG (NYSE:NVS) shares with a price target of $114 with a ‘Market Perform’ rating for the shares. The target price represents a potential upside of 15.15% based on the latest share price.
9. Workday, Inc. (NYSE:WDAY)
14-day RSI: 35.93
Number of Hedge Fund Holders: 81
Based in Pleasanton, California, Workday, Inc. (NYSE:WDAY) is a leading provider of enterprise cloud applications for finance and human resources. Its platform is used by more than 10,000 organizations around the world and across industries – from medium-sized businesses to more than 50% of the Fortune 500.
On February 26, Workday, Inc. (NYSE:WDAY) released its financial results for quarter ended January 31, 2024. Its revenue increased by 17% y-o-y to $1.9 billion, while it generated a net income of $1.2 billion.
Polen Capital, an investment management firm, made the following comments about Workday, Inc. (NYSE:WDAY) in its “Polen Global Growth Strategy” fourth quarter 2023 investor letter:
“Following the investor day, Workday’s stock price rose significantly during Q4, buoyed by the company’s fiscal Q3 2024 earnings report, which was better than anticipated and included management raising revenue guidance for their fiscal 2024. We view the long-term guidance provided at the investor day as likely to be conservative, with ample room for Workday to continue taking share in the $100bn+ global HCM (human capital management) market. We remain confident in Workday’s ability to generate 20%+ annualized earnings growth over the next three to five years.”
8. McDonald’s Corporation (NYSE:MCD)
14-day RSI: 35.50
Number of Hedge Fund Holders: 63
Chicago, Illinois-based McDonald’s Corporation (NYSE:MCD) is the biggest fast-food restaurant chain operator worldwide. It began with a single drive-in restaurant in San Bernardino, California in 1955 and has since grown to nearly 40,000 locations across more than 100 countries globally and serves more than 60 million customers annually.
On February 5, McDonald’s Corporation (NYSE:MCD) released its financial results for Q4 2023. Its revenue increased by 8% y-o-y to $6.4 billion while it generated a net income of $2.04 billion. Its normalized EPS of $2.95 surpassed consensus estimates by $0.12.
As of Q4 2023, McDonald’s Corporation (NYSE:MCD) shares were owned by 63 of the 933 hedge funds tracked by Insider Monkey, for a total value of $2.1 billion. Ken Griffin’s Citadel Investment Group was the largest shareholder with ownership of 1.8 million shares valued at $533 million.
7. Zoetis Inc. (NYSE:ZTS)
14-day RSI: 32.16
Number of Hedge Fund Holders: 50
Parsippany, New Jersey-based Zoetis Inc. (NYSE:ZTS) is a leading animal health company with a portfolio and pipeline of medicines, vaccines, diagnostics, and technologies offered in over 100 countries. Formerly a subsidiary of Pfizer Inc. (NYSE:PFE), the company became independent through a spinoff in 2013.
Zoetis Inc. (NYSE:ZTS) has been continuously making efforts to increase its product franchises in major markets. During the fourth quarter, the company received approvals for Simparica Trio, the company’s triple combination oral parasiticide for dogs, in China. While the company’s injectable monoclonal antibody for the alleviation of pain associated with osteoarthritis in cats, Solensia, received approval in Brazil.
Zoetis Inc. (NYSE:ZTS) has paid regular dividends since its spinoff from Pfizer Inc. (NYSE:PFE) with consecutive dividend increases for several years. The board of directors of the company declared a dividend of $0.432 per share for Q2 2024, on February 6.
6. Apple Inc. (NASDAQ:AAPL)
14-day RSI: 32.14
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is a leading technology company focused on the designing, manufacturing, and marketing of smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services. It released worldwide the latest version of its flagship smartphone titled iPhone 15, on September 22 last year.
The quarterly revenue of Apple Inc. (NASDAQ:AAPL) increased by 2% on a y-o-y basis in the quarter ended December 30. The company posted a revenue of $119.6 billion and a net income of $33.9 billion, which translated to an adjusted EPS of $2.18.
As of Q4 2023, Apple Inc. (NASDAQ:AAPL) shares were held by 133 of the 933 hedge funds tracked by Insider Monkey, the highest on our list of 11 oversold blue chip stocks to buy right now. Warren Buffett’s Berkshire Hathaway was its biggest shareholder with ownership of 905.6 million shares valued at $174 billion.
In its Q4 2023 investor letter, Wedgewood Partners, an investment management firm, made the following comments about Apple Inc. (NASDAQ:AAPL):
“The Company’s services segment revenue growth accelerated to +16% over last year, one of the fastest growth rates since Covid-19 lockdowns, helping drive +11% growth in earnings per share. The strength in the Company’s services segment was aided by over 1 billion paid subscribers across Apple’s media platforms. We estimate that there are more than 2 billion iOS devices in Apple’s global installed base, which still represents a very large addressable share of their current subscriber count. Apple also continues to innovate across its hardware portfolio, with custom silicon for nearly all its device form factors. More recently, the Company launched its new line of Mac computers, which included their M3 family of chips, including the M3 Max, which contains up to an astonishing 92 billion transistors. Apple’s long-term strategy of creating products with customized hardware and software should continue to differentiate their products and help drive solid revenue growth and expense leverage across the Company’s ecosystem.”
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Disclosure: None. 11 Oversold Blue Chip Stocks to Buy Right Now is originally published on Insider Monkey.