Investors have a lot to digest this week, as official data raises lingering doubts about the economy and a flurry of earnings reports come out. Major stock indexes ended lower on Thursday as U.S. first-quarter gross domestic product fell sharply below expectations. But by Friday, upbeat earnings reports from Microsoft and Alphabet set a different tone after Thursday’s close and stocks appeared to be staging a comeback, with all three indexes on track for a positive week. Despite the reversal of fortunes, Thursday’s share price decline may just be a sign that some stocks should cool off, while others may deserve another look. CNBC Pro uses its Stock Screener tool to identify Wall Street’s most overbought and oversold stocks as measured by the 14-day Relative Strength Index (RSI). Stocks with a 14-day RSI above 70 are overbought, indicating that the stock price may soon decline. On the other hand, a reading below 30 usually indicates that the stock is oversold and may be due for a rebound. Alphabet is listed, with an RSI of 75. Most analysts have a consensus buy rating on the stock, but expect an average decline of 3% going forward. The tech giant reported first-quarter earnings and revenue on Thursday, with its Google Cloud and YouTube advertising revenue beating expectations. Alphabet also declared a dividend for the first time. Buoyed by the news, Google’s stock price rose more than 10% on Friday, and its growth this year has reached 23%. Chipotle Mexican Grill is also on the list, with an RSI of 77. Shares of the fast-casual chain are up 39% this year as the company consistently outperforms its peers. After the close Thursday, the taco chain reported first-quarter earnings and revenue that beat analysts’ expectations, helping push the stock to a new 52-week high in Friday trading. Although Chipotle has had to raise menu prices, its traffic remains strong. Toys and entertainment company Hasbro, with an RSI of 77, is on the list of stocks that could see a pullback soon. Hasbro’s stock price will rise 26% through 2024. The stock rose 11% earlier this week after a better-than-expected earnings report reinforced views that the company’s turnaround efforts are starting to improve results. But some businesses are still struggling to sell. On the other hand, Ulta Beauty has an RSI of 21, making it one of the most oversold stocks on Wall Street. The cosmetics retailer’s shares have fallen 17% this year. The stock fell last week after Jefferies downgraded its rating on the stock to hold from buy, citing growing competitive pressure. “We see Ulta as a stock acquirer in the current macro environment, but ULTA’s prestige business (50% of sales) is limited by a lack of freshness and growing pressure from Sephora, which adds (next 12),” wrote analyst Ashley Hargens. JB Hunt Transport Services, with an RSI of 21, is one of the most sold companies. The transportation company’s shares have fallen more than 19% this year and fell 8% in a day last week after missing analysts’ expectations for its first-quarter earnings and revenue. Technology giant International Business Machines RSI is 19. The stock is up less than 2% this year, while the S&P 500 information technology industry benchmark is up more than 8% year to date. IBM reported better-than-expected first-quarter earnings, but missed revenue expectations, sending the company’s shares lower this week. —CNBC’s Fred Imbert contributed to this report.
