7 Oversold Stocks to Buy in June 2024


  • With these seven oversold stocks to buy, investors have thrown out opportunity with the bathwater.
  • Arcos Dorados (ARCO): Easing macro challenges could drive a rebound for ARCO stock.
  • Build-A-Bear Workshop (BBW): Following the specialty retailer’s post-earnings plunge, uncertainty is more than priced into BBW stock.
  • Global Payments (GPN): Souring sentiment for GPN has knocked this payments stock to a considerably lower valuation than its peers.
oversold stocks to buy - 7 Oversold Stocks to Buy in June 2024

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Investors with a contrarian bent are likely interested in figuring out what are the top oversold stocks to buy. However, it’s reasonable to say that “oversold” is in the eye on the beholder.

That is, as Investopedia explains in its definition, “oversold” is a subjective term. There are technical trading tools that can help you identify oversold stocks. Most notably, the Relative Strength Index.

However, merely buying every stock with a technically oversold rating (below 50) does not guarantee you will profit in the aggregate. To further whittle down a list of oversold stocks, it’s key to use fundamental analysis to screen out stocks that rapidly moved lower for a good reason.

Doing this will provide a list of stocks that have been unfairly bailed on by investors, and situations where shares have moved too far, too fast, relative to changes (if any) in fundamentals or future prospects. The following seven oversold stocks to buy fall into this category.

Arcos Dorados (ARCO)

An image of a McDonald's store front with the red and yellow "M" logo, advertisements and signs on the windows, and a white, black, red, and yellow Ronald McDonald statue sitting in front.
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Arcos Dorados (NYSE:ARCO) is the master franchisee for McDonald’s (NYSE:MCD) in most of Latin America and the Caribbean. Shares in the Uruguay-based company, whose name in Spanish translates to “Golden Arches,” has, like MCD stock itself, been pulling back in recent months.

McDonald’s, as I discussed recently, is pulling back due to uncertainty over the impact of macroeconomic challenges. ARCO stock is pulling back for similar reasons. However, a return to growth for Arcos Dorados could arrive far more easily than for its franchisor.

Thanks to further organic growth, as well as the expected normalization of macro challenges starting next year, a growth resurgence may be just around the corner. Sell-side forecasts call for earnings per share to rise by around 16.5% during 2025. With this, buying oversold ARCO today, at just 11.5x forward earnings, there is potential for substantial upside.

Build-A-Bear Workshop (BBW)

A Build-A-Bear (BBW) storefront in Philadelphia, Pennsylvania.
Source: Helen89 / Shutterstock.com

Following a recent post-earnings plunge, Build-A-Bear-Workshop (NYSE:BBW) once again became one of the oversold stocks to buy. On May 30, the specialty retailer reported its latest quarterly results and updated guidance.

While Build-A-Bear reiterated guidance, revenue and earnings fell short of forecasts. Yet while it makes sense that BBW stock tanked on this news, it’s not as if uncertainty over the company’s underlying performance was insufficiently baked into its valuation. Shares traded at a low valuation before earnings, and since earnings have fallen back to a forward multiple of just 7.5x.

Furthermore, the guidance reiteration strongly suggests that “better than feared” results, or perhaps even “beat and raise” results, may lie ahead in the coming quarters. This could help get BBW stock on an upward trajectory and enable shares to re-hit recent highs in the low-$30s, or surge to even higher prices.

Global Payments (GPN)

Global Payments office building in Brantford, Ontario, Canada. GPN stock.
Source: JHVEPhoto / Shutterstock

Global Payments (NYSE:GPN) is another company that has entered oversold territory this earnings season. Shares in the payment processing firm have moved steadily lower since reporting first-quarter results on May 1.

Although results came in ahead of forecasts and guidance was reiterated, investors bailed on GPN stock. Perhaps they read too much into comments from CFO Josh Whipple, who stated on the earnings call that the outlook for 2024 “continues to reflect the potential for a slightly more tempered economic environment” compared to 2023.

However, with the sell-off pushing GPN down to a valuation of just 8.7x forward earnings, the market could quickly realize that it has overreacted. Shares today trade at a steep discount to comparable payment processing companies. Another potential catalyst for Global Payments is a possible sale of its moribund AdvancedMD subsidiary, even if it’s sold for a fire-sale price.

Hudson Technologies (HDSN)

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For many years, Hudson Technologies (NASDAQ:HDSN) was on a tear. Mostly because changing regulations was a boon for the refrigerant reclamation business. More recently, though, sentiment has shifted in a big way.

Investors are disappointed that the big payoff from this tailwind has taken longer than expected to arrive. HDSN stock is down by more than a third year-to-date. However, following this sell-off, Hudson has become one of the oversold stocks to buy. As Seeking Alpha contributor Ken Taylor argued last month, the market’s impatience makes this stock a strong opportunity.

While the company may not be set to hit its prior 2025 growth targets, high growth remains a strong possibility starting two years out. There could also be some silver linings from this delay, such as Hudson’s ability to acquire competitors at more favorable prices. Hence, if you’re a contrarian with a long time horizon, consider HDSN.

Li Auto (LI)

Silhouettes of charging electric car and wind turbines. Getting electricity from renewable energy sources. EVs. Electric vehicles. EV stocks.
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Li Auto (NASDAQ:LI) appeared to be making a comeback earlier this year, but in recent months, shares in the China-based hybrid automaker pulled back considerably. Trading for as much as $47.33 per share as recently as March, LI has dropped to the low $20s.

Yet while this sell-off has been driven by negative developments such as the continued EV price war in China, a lackluster earnings report, and delays in Li’s launch of fully electric SUV models, LI stock is not just oversold in a technical sense. Shares are value territory as well.

Why? Even as Li is being affected by the price wars, the company remains profitable. A profitability rebound may arrive next year, as headwinds recede and the company’s pivot to becoming an EV pure play continues. Trading for only 10.6 times estimated 2025 earnings, improved sentiment could drive a massive re-rating.

Remitly Global (RELY)

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After falling by a third since the start of 2024, Remitly Global (NASDAQ:RELY) has become one of the oversold stocks to buy. Yes, on the surface, it makes some sense why investors have given up on shares in this remittance services-focused fintech firm.

While not certain, a big reason for the market’s downbeat view on RELY stock may have to do with profitability or the lack thereof. Despite scaling up considerably in recent years, Remitly has yet to become profitable. However, revenue keeps growing at an elevated pace. Last quarter, the company’s top line was up 32%. Adjusted EBITDA also jumped considerably.

Forecasts still call for a swing to full-year profitability. From there, Remitly could experience outsized earnings growth, such as an 85.4% increase between 2024 and 2025. If results improve, so too will sentiment, which may result in a strong rebound for RELY.

Sun Country Airlines (SNCY)

stock image of the interior of a passenger aircraft. Airline stocks are up again.
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Some airline stocks have kept climbing lately. Sun Country Airlines (NASDAQ:SNCY) isn’t one of them, unfortunately. Shares in this low-cost carrier have been trending lower for some time. In May alone, SNCY nosedived, falling by around 21% throughout the month.

Underwhelming quarterly results were a factor in this pullback. As InvestorPlace Earnings reported May 7, Sun Country missed on both revenue and earnings forecasts for the first quarter. However, following this drop, SNCY stock entered oversold territory. All it may take for shares to bounce back is for the airline to report “better than feared” results in the coming quarters.

This could be more than doable. As InvestorPlace’s Chris Markoch recently discussed, Sun’s hybrid passenger, charter and cargo business model may give the carrier flexibility if passenger air travel dips further. Analysts also call for the carrier to experience further growth in 2025, with earnings rising by around 54%.

On the date of publication, Thomas Niel did not hold (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.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/7-oversold-stocks-to-buy-in-june-2024/.

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