Builders First Source emerged as one of the most oversold stocks this week as traders grappled with the Iran war and soaring oil prices. Major stock averages fell this week, weighed down by escalating tensions in the Middle East, U.S. oil prices above $90 a barrel, and February jobs data that surprised economists. The Dow Jones Industrial Average fell 3% for the week and the S&P 500 fell 2% due to the market turmoil. Certain stocks seem to have been caught up in the overall market decline more than others. CNBC Pro used our stock screener tool to identify these stocks based on their 14-day relative strength index (RSI). A stock with a 14-day RSI below 30 is considered oversold, meaning a rebound may be near. Conversely, a value above 70 indicates that the stock is overbought and could fall. The following table shows the most oversold names this week. Builders First Source fell nearly 11% this week, finishing with an RSI reading of 22. The building materials company’s stock fell along with the iShares U.S. Home Construction ETF (ITB), which has fallen more than 8% since the beginning of the week. Despite the recent moves, RBC Capital Markets on Thursday upgraded Builders First Source to Outperform Sector Performer, noting that the stock’s valuation remains attractive after the stock’s decline. “In the economic trough, margins are more defensible than feared,” analyst Mike Dahl said. Scale maker Mettler Toledo International was the week’s most oversold stock, with an RSI of 18. The stock has fallen more than 11% this week. Mettler Toledo last month expected first-quarter earnings of $8.60 to $8.75 per share, compared with analysts’ estimates compiled by FactSet of $9.01 per share. However, METTLER TOLEDO reported higher adjusted earnings and sales in the fourth quarter and raised its adjusted earnings outlook for the fiscal year from its previous forecast. Meanwhile, stocks that were in overbought territory this week included CF Industries and LyondellBasell Industries. Fertilizer company CF Industries entered the list of overbought stocks with an RSI of 78. CF Industries is up about 16% this week as fertilizer prices rise heading into next planting season. The closure of the Strait of Hormuz could further impact fertilizer prices, as about 15% of the world’s phosphate is produced in the Middle East and shipped out of the Strait, said Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. Similarly, investors have become more bullish on chemical maker LyondellBasell Industries, which is up about 17% for the week. KeyBanc Capital Markets recently upgraded the stock from sector weight to overweight. “We upgrade DOW and LYB to Overweight as approximately 11-15% of global ethylene/PE production capacity is directly affected by the US/Israel and Iran conflict. Moreover, rising oil prices are steepening the global cost curve, benefiting US-based producers,” said analyst Alexei Yefremov. The company views LyondellBasell’s position as “relatively well-positioned” due to its small number of assets in the Persian Gulf.
