Investors have a lot to digest this week, as government data raises lingering doubts about the economy and a slew of earnings reports emerge. 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 after Thursday’s close set a different tone, and stocks appeared to be making 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 said to be overbought, indicating that the stock price may soon fall. On the other hand, a reading below 30 usually indicates that the stock is oversold and may be due for a rebound. Alphabet is on the list, with an RSI of 75. The tech giant reported first-quarter profits and revenue on Thursday, with its Google Cloud and YouTube ad revenue beating expectations. Alphabet also announced its first-ever dividend. Affected by this news, Google’s stock price rose more than 10% on Friday, and its increase this year has reached 23%. Chipotle Mexican Grill is also on the list, with an RSI of 77. After Thursday’s close, the taco chain reported first-quarter earnings and revenue that beat analysts’ expectations, helping to push the stock to a new 52-week high in Friday trading. Even though Chipotle’s has had to raise menu prices, its traffic remains strong. Toy and entertainment company Hasbro, with an RSI of 77, is also on the list of stocks that could see a pullback soon. Hasbro’s stock price will rise 26% by 2024. But sales in some businesses are still struggling. Ulta Beauty, on the other hand, 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 the stock to hold from buy, citing growing competitive pressure. “We view Ulta as a stock acquirer in the current macro scenario, but ULTA’s prestige business (50% of sales) is constrained by a lack of freshness and increasing pressure from Sephora, which adds (next 12 ),” analyst Ashley Hergens wrote. JB Hunt Transport Services, with an RSI of 21, is also among the most oversold companies. The transportation company’s shares have fallen more than 19% this year and fell 8% in a single day last week after missing analysts’ expectations for its first-quarter profit and revenue. Technology giant International Business Machines has an RSI of 19. IBM reported better-than-expected first-quarter earnings, but revenue missed expectations, sending the company’s stock lower this week. —CNBC’s Fred Imbert contributed to this report.
