The recent tumult in the communication services sector has unveiled a promising opportunity to dive into undervalued stocks.
One metric shining a light on potential winners is the Relative Strength Index (RSI). It juxtaposes a stock’s strength on upward versus downward price movements, projecting its short-term trajectory. An RSI below 30 typically flags oversold assets, a signal keenly followed by discerning traders.
1. Tencent Music Entertainment Group – ADR TME
- Tencent Music Entertainment recently disclosed a 1.7% year-over-year revenue decline to $985.00 million in its fiscal second quarter of 2024, falling short of the market forecast. Despite this setback, Cussion Pang, Executive Chairman of TME, expressed optimism, noting significant net subscriber additions and ARPPU expansion, highlighting the company’s resilience in China’s streaming domain. While TME’s stock dipped 10% in the past month, hitting a 52-week low of $5.96, its current RSI rests at 29.61.
- RSI Value: 29.61
- TME Price Action: Tencent Music’s shares concluded at $9.51 on Friday after a 2.5% decline.
2. Douyu International Holdings Ltd DOYU
- In its recent earnings report for the second quarter, Douyu International witnessed a 25.9% revenue drop to $142.01 million, missing analysts’ expectations. Consequently, the company’s stock plummeted by 59% in the past month, reaching a 52-week low of $6.29. Notably, DOYU’s RSI now stands at 24.49.
- RSI Value: 24.49
- DOYU Price Action: Douyu International shares saw a modest 2.2% uptick, ending the week at $7.79.
3. Webtoon Entertainment Inc WBTN
- Webtoon Entertainment reported disappointing second-quarter revenue figures, triggering a 15% decline in the company’s shares over the past five days. Despite this setback, the company’s Founder and CEO, Junkoo Kim, remains optimistic. WBTN, with a 52-week low of $10.22, currently boasts an RSI of 28.30.
- RSI Value: 28.30
- WBTN Price Action: Webtoon Entertainment stocks rallied by 1.1% on Friday, closing at $10.42.
These market movements and metrics highlight a potential opportunity for investors to capitalize on the undervaluation and oversold nature of these tech and telecom stocks, potentially setting them on a trajectory poised for growth in the upcoming quarter.
