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    Home»Investment»Walmart, Netflix among most overbought stocks as market heads for winning week
    Investment

    Walmart, Netflix among most overbought stocks as market heads for winning week

    By Staff WriterDecember 7, 20244 Mins Read
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    The S & P 500 soared to all-time highs this week as investors eagerly snapped up stocks, but some names might be overbought and due for a pullback. The broad market index is on track for a three-week winning streak and is up nearly 1% week to date, while the Nasdaq Composite is heading for a weekly advance of more than 3%. Both indexes hit new intraday highs on Friday. The Dow Jones Industrial Average is the laggard, losing roughly 0.5% this week. Some names that have raced ahead during this year-end rally could be due for profit taking, however. With the CNBC Pro stock screener tool , which uses LSEG data, we found stocks that are considered technically overbought based on their 14-day relative strength index, or RSI. Names with an RSI reading above 70 tend to be considered overbought, suggesting a potential pullback ahead. An RSI below 30 often implies a stock is oversold and could see future upside. Take a look at the broader market’s most overbought names below, with week-to-date data current as of Friday morning: Walmart is the most overbought name on the list with an RSI of about 83.3. Shares of the big-box retailer hit a new 52-week high on Friday as investors increasingly view the name as a winner in attracting value-seeking holiday shoppers. Bank of America on Thursday reiterated its buy rating on Walmart, saying a higher multiple for its stock is warranted even as its current valuation is above levels seen over the past 20 years. “WMT has undergone a digital/omni-channel transformation that is driving share gains across incomes and unlocking high-margin monetization streams,” analyst Robert Ohmes wrote in a note to clients. “We think continued sales strength, margin improvement and outperformance vs. retail peers should drive further multiple expansion.” Bank of America has a $105 price target on shares, implying upside of more than 10% from Thursday’s close. Shares are up more than 82% in 2024. Netflix , another popular stock, is also considered overbought given its RSI of more than 76. Shares of the streaming giant are up 90% this year. Analysts have been enthused by the company’s strong growth in ad-tier memberships, which jumped 35% in the third quarter from the previous quarter. Netflix is planning to launch the service in Canada in the coming quarter and more broadly in 2025. “We believe multiple expansion driven by incremental confidence in the firm’s ad-tier has been the primary driver of NFLX’s equity returns this year. NFLX bulls believe the ad tier can drive both drive incremental subs and ARPU,” Citi Research analyst Jason Bazinet wrote in a Wednesday note. He raised his price target by $195 to $920, which suggests just 0.2% potential upside, however. Other overbought stocks include Palantir , United Airlines and Take-Two Interactive Software . Palantir has been on a tear this year, popping more than 340%. Shares jumped nearly 6% on Friday after Palantir and Booz Allen Hamilton jointly announced a partnership to accelerate U.S. defense mission innovation. Oversold names include food makers Kraft Heinz and Mondelez . The stocks have lost more than 3% and over 2% this week, respectively, and are in the red for the year. Kraft was recently downgraded to neutral from overweight by Piper Sandler, which said in a mid-November note that the packaged food stock is struggling to make a turnaround in its retail sales decline, including in its Lunchables brand. The firm also noted that Robert F. Kennedy Jr., who President-elect Donald Trump picked to be head of the Department of Health and Human Services, could be a risk. Health-care stocks HCA Holdings and Johnson & Johnson also made the cut.

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