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7 Oversold Stocks on the Verge of Blasting Off

  • Although attempting to catch a falling knife isn’t the safest activity, these oversold stocks might have gone too deeply into the abyss based on their fundamentals.
  • Warby Parker (WRBY): Cynically, Warby Parker is one of the oversold stocks to buy since global myopia trends are moving in the company’s favor.
  • Netflix (NFLX): Though Netflix has suffered steep subscriber losses, its cheap entertainment proposition makes NFLX one of the more attractive oversold stocks to gamble on.
  • Gatos Silver (GATO): Suffering from a reserve-count estimate mistake, the negativity may have already been priced in for Gatos Silver while inflation pressures bolster GATO.
  • Twilio (TWLO): While Twilio’s digitalization initiatives may be presently hitting a lull, the company enjoys a relatively strong balance sheet.
  • Sea (SE): A Singapore-based tech conglomerate currently hurting from a major downsizing, the Southeast Asia market nevertheless provides intriguing upside for Sea.
  • bluebird bio (BLUE): A biotech firm specializing in gene therapies, bluebird bio’s groundbreaking research may help lift BLUE over the long haul.
  • Genius Sports (GENI): A sports data and tech firm, Genius Sports offers compelling value-add for sports leagues, bookmakers and media companies.
oversold stocks - 7 Oversold Stocks on the Verge of Blasting Off

Source: iQoncept / Shutterstock.com

Although investors should generally stay away from oversold stocks that are in the middle of severe thunderstorms, in certain cases, the negativity could be unfairly brutal. Whether through strong industry fundamentals, specific business strengths or a combination of the two, investors willing to absorb hefty risks could enjoy significant profits that would otherwise not be possible in normal market cycles.

One of the factors that make for potentially intriguing oversold stocks is that the equities sector never swings in perfectly linear fashion. That is, in a bid to seek a balance between bullish and bearish demand, valuations tend to gyrate substantially before finding equilibrium. During a harsh down cycle such as now, bearish bias might overshoot, creating “unnatural” discounts for particular companies.

Therefore, by acquiring oversold stocks that still offer fundamental relevance, investors that dove in early could benefit handsomely once the broader market realizes its error. While there will be permanent losers in the equities space, it’s unlikely that all securities will go to zero.

To be fair, attempting to catch a falling knife is risky so you don’t want to play with money you can’t afford to lose. However, if you’re prepared, here are oversold stocks to consider.

Ticker Company Current Price
WRBY Warby Parker Inc. $13.39
NFLX Netflix, Inc. $170.91
GATO Gatos Silver, Inc $3.12
TWLO Twilio Inc. $85.17
SE Sea Limited $72.87
BLUE bluebird bio, Inc. $4.16
GENI Genius Sports Limited $2.57

Oversold Stocks: Warby Parker (WRBY)

The front of a Warby Parker (WRBY) store in Hoboken, New Jersey.
Source: Dev Chatterjee / Shutterstock.com

Following the close of the June 16 session, eyeglass and contact lens retailer Warby Parker (NYSE:WRBY) saw its shares slip 5%. Even worse, the red ink exacerbated its year-to-date loss to a staggering 71%. Since its first public close, WRBY has hemorrhaged 75% – not exactly a great launch to an initial public offering.

Still, there might be something here based on a cynical fundamental development. According to scientific experts, myopia (or nearsightedness) is forecasted to affect half of the world’s population by 2050. While it’s speculation on my part, the wider push toward digitalization and thus the dissociation from nature might accelerate this myopia trend.

Therefore, on a very long timeline, WRBY is poised to swing higher, assuming it can stay in business. Another factor that benefits Warby Parker is its focus on low-priced offerings. With the hefty impact of inflation reducing the purchasing power of the dollar, such price awareness could help WRBY, especially considering the business is essential to millions.

Netflix (NFLX)

Picture of a person laying on a couch holding a mobile phone that features the Netflix (NFLX) logo on the screen
Source: Alex Ruhl / Shutterstock.com

One of the shockers among oversold stocks, Netflix (NASDAQ:NFLX) is emblematic of the reverse of fortunes that some companies suffered amid the coronavirus pandemic. At first, the global health crisis was a fortuitous tailwind for the streaming content giant as people really had nowhere to go. Now that consumers are looking to make up for lost experiences, Netflix tumbled badly.

On a YTD basis, NFLX has hemorrhaged a staggering 71% of market value. However, there might be some signs that the streaming specialist is poised to make a comeback. In the trailing month, NFLX is down “only” 8%, which is an improvement over prior sessions’ freefall nature.

Better yet, on a fundamental note, Netflix can regain the cheap entertainment angle that initially boosted its share price. How so? As inflation – judged by the consumer price index (CPI) – gets onerous, households will be forced to abandon their vacation plans for more reasonable entertainment.

Even with the price hikes, Netflix offers significant bang for the buck. Therefore, its lost subscribers could be coming back, making NFLX one of the oversold stocks to consider.

Gatos Silver (GATO)

Macro of silver
Source: Phawat / Shutterstock.com

Regarding the topic of heavily oversold stocks, my former InvestorPlace colleague Vince Martin was fond of saying that sometimes, publicly traded securities are down big for a reason. With precious metals mining firm Gatos Silver (NYSE:GATO), the explanation for its steep market penalty – down 69% YTD – is quite simple (and alarming).

Basically, management disclosed errors in the estimation of resources held in one of its mining projects. As you can see from its chart, the disclosure plunged GATO almost straight down. The news is also problematic because it’s now incredibly difficult to assess the future viability of the company.

Still, if you’re the optimistic type, another argument exists: the negativity in GATO stock could be priced in. Even if it wasn’t entirely priced in, the overriding catalyst for Gatos Silver is that the underlying asset is in demand because of inflation.

As my current colleague Will Ashworth stated, inflation is easy to spark but difficult to get out of. Therefore, keep an eye on GATO as one of the oversold stocks to possibly gamble on.

Oversold Stocks: Twilio (TWLO)

The Twilio (TWLO) logo is seen on a smartphone. Twilio is a cloud communications platform as a service company based in San Francisco, California.
Source: Tada Images / Shutterstock.com

Specializing in communication APIs, Twilio (NYSE:TWLO) enjoyed a dramatic runup during the new normal as people gravitated toward online services such as food-delivery platforms. As well, the company provides two-factor authentication (2FA) via its Authy app. Naturally, 2FA features strongly in the cryptocurrency sector, another major beneficiary of the Covid-related disruption.

But now that these cynical tailwinds have faded into the rear-view mirror, TWLO has been left struggling for traction. On a YTD basis, shares have tanked 67%, basically returning to the doldrum levels of spring 2020. Still, it’s possible that TWLO is one of the oversold stocks that have gone too heavily in the negative direction.

For one thing, Twilio features solid strengths overall in the balance sheet, with a highlight being its equity-asset ratio of 0.85, ranked better than 82% of companies in the interactive media sector. As well, its Altman Z-Score is well into the safe zone.

Finally, while segments like cryptos are hurting, it’s quite possible that the underlying administrative functions such as 2FA will still be in strong demand, thus boosting TWLO’s profile.

Sea Limited (SE)

The logo for Sea Limited (SE) is seen on a web browser through a magnifying glass.
Source: Postmodern Studio / Shutterstock.com

A technology conglomerate based in Singapore, Sea (NYSE:SE) quickly became a fan favorite following the doldrums of spring 2020. With business units covering exciting avenues such as e-commerce, financial services and video games, SE was a massive winner up until November of last year. Since then, the narrative has been ugly.

Indeed, on a YTD basis, SE is down 67%, representing an astounding change of fortunes. At the same time, the underlying company could make a case for being one of the oversold stocks to consider. Primarily, its connection to the Southeast Asia tech economy is too strong to ignore.

According to data compiled by Statista.com, last year, the size of Southeast Asia’s internet economy was $174 billion. By 2025, experts project that this valuation could expand to $363 billion. Not to be outdone, a Reuters article pointed out that by 2030, the segment could command a value of $1 trillion.

Granted, the current circumstances involving its first major downsizing don’t help. However, for the patient investor, SE could turn out to be a dream discount.

bluebird bio (BLUE)

Pipette adding fluid to one of several test tubes; biotech
Source: motorolka / Shutterstock.com

Diving into the extremely speculative portion of oversold stocks to possibly buy for tremendous upside, we’re going to start off with bluebird bio (NASDAQ:BLUE). A biotechnology firm focusing on gene therapy, bluebird is on the cutting edge of genomic research. While several companies have sprouted up in this segment, what distinguishes BLUE from the competition is its unique science.

For starters, gene therapy broadly involves the process of correcting a genetic mutation. Here, bluebird’s investigational therapies are manufactured with the patient’s own hematopoietic (blood) stem cells, thus eliminating the need to find a stem cell donor. If successful, bluebird can potentially set a framework for addressing genetic diseases.

Now, BLUE has shed 58% YTD, making it one of the oversold stocks but likely for a reason. Simply put, investors are leery about the incredible volatility of investigational biotechs. For instance, bluebird’s gene therapies are not approved by the Food and Drug Administration.

Nevertheless, if you want to swing for the fences on down-and-out securities, bluebird is quite intriguing for its paradigm-shattering potential.

Oversold Stocks Genius Sports (GENI)

A baseball glove rests on a field with a baseball and several hundred dollar bills inside.
Source: KAMONRAT / Shutterstock.com

Easily the most speculative name among the oversold stocks on this list, Genius Sports (NYSE:GENI) is a sports data and technology firm that provides data management, video streaming and integrity services to sports leagues, bookmakers and media companies. If you’re a sports fan, you’re consuming the underlying technology without even consciously thinking about it.

For example, when watching a baseball game, we’re accustomed to an array of data called sabermetrics. From how far and how fast a ball left the bat to the revolutions per minute of a pitcher’s curveball, the modern viewer is treated to information that was unthinkable decades ago.

But it’s not just viewers that benefit from the integration of data in sports. From head coaches drafting up a game plan to broadcasters desiring to bring fans deeper into a particular league, Genius Sports provides the tools to enhance athletic competitions.

That said, GENI is down 66% YTD and it’s dropped 16% in the trailing month. Therefore, gamble carefully.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/7-oversold-stocks-on-verge-of-blasting-off/.

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