When it comes to understanding the potential movement of stocks, the relative strength index (RSI) is a valuable tool. It is a momentum indicator measuring price changes, giving valuable insights as it oscillates from 0 to 100. Readings over 70 indicate an asset is overbought and below 30 oversold. Typically, these points mark high and low points for a given asset.
However, an interesting opportunity lies in the mid-point of the RSI. A reading of 50 represents where an asset may transition towards overbought and oversold. An asset with a value above 50 and moving towards 70 is not yet overbought, and its momentum may suggest further upward movement. Near-overbought stocks present a potential “last-minute opportunity” to participate in price appreciation as momentum has not reached the overbought territory.
Considering these dynamics, we have identified three near-overbought stocks to buy that present an opportunity for potential fast gains.
PBF Energy (PBF)
A top pick among near-overbought stocks to buy is PBF Energy (NYSE:PBF), one of the largest independent petroleum refiners. The company may be well positioned to gain as it currently trades around $50 while its RSI stands at 68, outperforming the industry average of 46.
Moreover, refining capacity constraints persist in the United States, with refined fuel demand projected to grow. Since supply cannot keep pace, the refiner could benefit through expanded margins throughout the year if economic conditions remain positive.
PBF will report earnings on February 15. Notably, the company has a track record of beating analyst estimates, averaging nearly 20% over the prior two quarters. Current projections anticipate an EPS of 8 cents on $7.05 billion in revenue. Of seventeen analysts tracking the stock, only one recommends selling. The remainder suggest holding or buying.
BAP Credicorp (BAP)
As Peru’s largest financial services group and owner of the dominant universal bank and pension fund manager, BAP Credicorp (NYSE:BAP) is another pick among near-overbought stocks to buy. BAP trades at over $150 per share, with its RSI having extended to 66.3.
The company is also well-supported to benefit from an expected economic acceleration. The Peruvian economy is forecast to rebound to 3% growth in 2024 from contraction last year, accelerating further to 3.6% in 2025. Interest rate cuts by the central bank should also reduce borrowing costs, adding to the potential.
Credicorp will report its earnings on February 9, where consensus forecasts $2.74 EPS on $1.28 billion in revenue. All thirteen analysts rate the stock as a buy or hold.
Costamare (CMRE)
Costamare (NYSE:CMRE), an owner and lessor of container vessels and dry bulk carriers, may be due to short-term gains as well. Its RSI trades near-overbought levels and presents a potential for continued upward momentum at 66.6. While close to the over-bought threshold of 70, CMRA is not quite there yet, but may soon due to momentum prospects.
While global concerns grow regarding potential economic impacts arising from tensions in the Red Sea, some view elevated freight rates as an opportunity to bolster shipping stocks. With companies scrambling to charter additional tonnage due to regional uncertainties, the market remains favorable for Costamare’s operations.
The company will announce its financial results on February 7, with analysts forecasting EPS of 63 cents on anticipated sales of $367.2 million. CMRE is currently trading at a price-to-earnings ratio of 4.24, below the industry average of 6.5. Costamare is positioned as a strong candidate for investors seeking near-overbought stocks to buy for fast gains.
On the date of publication, Stavros Tousios 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.