During a year in which more than half of the stocks in the S&P 500 Index have declined 10% or more, you have probably seen the term “oversold” being bandied about.It means you think a stock has dropped too much, based on some quality you expect to fuel outperformance from here.
An example of a stock that may be oversold Shares of Signature Bank SBNY of New York have fallen 38% in 2022. This is one of the most rapidly growing regional banks. For example, during 2021, the bank grew its commercial and industrial loan portfolio by 79% to $32.9 billion, with loan quality remaining strong as it continued to poach lending teams from rivals.
Despite investors’ turn against the stock, Signature Bank is expected to continue its rapid growth. All 17 analysts covering the stock polled by FactSet rate the shares a buy or the equivalent, and based on consensus estimates, the bank is expected to increase its earnings per share 48% this year and 22% in 2023. But the stock’s forward price-to-earnings ratio has declined to 8.3 from 18.6 at the end of 2021. In comparison, weighted aggregate forward P/E ratios are 17.
But Netflix’s forward P/E ratio has dropped to 16.5 from 45.6 at the end of 2021. So it has gone from a lofty valuation for a rapidly growing tech-oriented company to a valuation below that of the S&P 500. Charles Lemonides of ValueWorks recently suggested the price drop set up a buying opportunity for long-term investors.
Hi marketwatch what do you think about US Steel stock?
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