3 Oversold Stocks Presenting a Value Opportunity

Josh Enomoto

February 28, 2024 4 min read

Oversold stocks are the equivalent of Wall Street’s clearance sale. Many times, stores have too much inventory of certain products that are holding up valuable real estate. They gotta go – and you just might benefit.

Of course, you don’t want to buy everything that’s offered simply because it’s on discount. If the clothes on the discount rack don’t fit you, you shouldn’t buy them. On the other hand, going the bargain route can be a shrewd opportunity. For instance, buying winter clothing during the spring can save you big-time bucks because you know that eventually, the season will change.

Another factor that makes oversold stocks compelling is that it’s possible the bears have moved onto other “victims.” If so, these ideas just might have resistance-free skies ahead.

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CAE (CAE)

the cockpit of a plane with two pilots sitting in it

Source: Shutterstock

A Canadian manufacturer of simulation technologies, CAE (NYSE:CAE) also provides modeling and training services to airlines, aircraft manufacturers, healthcare specialists and defense customers. With rising complexities in the field of aviation – and certainly in the defense and security arenas – CAE benefits from significant relevancies. However, the market has a different opinion.

Since the start of the year, CAE slipped 12%. In the past 52 weeks, shares are down more than 17%. That doesn’t seem to jive with the financials. In the fiscal year ended March 2023, the company posted revenue of $3.07 billion. On a trailing-12-month (TTM) basis, the top line expanded to $3.43 billion.

Analysts anticipate that in the current fiscal year, CAE should ring up $3.35 billion. That’s practically in the bag. Looking ahead to fiscal 2025, analysts project sales of $3.51 billion. Again, that seems a very reasonable target.

So, I’m not sure why the market hates CAE. Analysts rate it a moderate buy with a $24.43 average price target, implying about 31% upside. It’s one of the oversold stocks to buy.

B2Gold (BTG)

b2gold (BTG) logo on a web browser enlarged by a magnifying glass

Source: Pavel Kapysh / Shutterstock.com

As a gold-mining enterprise, B2Gold (NYSEAMERICAN:BTG) should theoretically benefit from the current market dynamic; that is, from stubbornly elevated inflation that continues to be sticky. Nevertheless, BTG easily ranks among the oversold stocks. While shares have been down 23% since the beginning of the year, the underlying gold market is putting up a fight.

Still, analysts have concerns about B2Gold’s recent financial performance. Yes, in 2023, the company posted revenue of $1.93 billion, up from the $1.73 billion posted a year earlier. However, in the fourth quarter, sales slipped to $512 million from the $592 million printed in the year-ago period. Subsequently, analysts project 2024 revenue to land at only $1.75 billion.

That seems a steep penalty given that in 2025, the same experts call for a consensus sales tally of $2.37 billion. With gold’s importance both as an inflation hedge and as a key industrial metal, I’m not sure the red ink in BTG is entirely deserved.

Intriguingly, Wall Street pegs shares as a strong buy with a $4.27 target, implying 78% upside potential.

PetMed Express (PETS)

A terrier lies on a dog bed with a cone on.

Source: Shutterstock

An online pet pharmacy, PetMed Express (NASDAQ:PETS) should theoretically benefit from a key catalyst: Americans love their furry friends. Indeed, many folks love their four-legged family members more so than their human counterparts. Nevertheless, PETS isn’t feeling the love in the market, ranking as one of the oversold stocks. Since the start of the year, shares have plunged almost 32%.

In the trailing year, circumstances get worse, with PETS losing roughly 73%. I’m going to be honest: it’s not entirely clear that the red ink is about to be erased soon. Part of the poor sentiment centers on the financials. In the fiscal year ended March 2023, PetMed posted sales of $256.9 million, down heavily from the $273.4 million printed one year prior.

Looking ahead, analysts see fiscal 2024 revenue to come in at $284.91 million. A year later, PETS may print sales of $305.56 million. The growth is very much believable given that Americans continue to pour money for their pets.

Finally, Lake Street analysts see shares hitting $9, implying over 74% upside potential.

On the date of publication, Josh Enomoto did not have (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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.