When everyone's selling a stock, sometimes that's when the smart money starts paying attention. The most oversold stocks in the industrials sector can present opportunities to buy into undervalued companies, assuming the selling has gotten a bit overdone.
The Relative Strength Index is a momentum indicator that compares a stock's strength on up days versus down days. It gives traders a sense of how a stock might perform in the short term when viewed alongside price action. Generally, when the RSI drops below 30, an asset is considered oversold, suggesting the selling pressure might have reached an extreme.
Here are three major industrial players currently sporting RSI readings near or below that 30 threshold.
Tecogen Inc. (TGEN)
Tecogen posted mixed quarterly results on November 12, but CEO Abinand Rangesh had some interesting news about the company's pipeline. "Since our last earnings call we have made tremendous progress," Rangesh commented. "First, the potential data center customer we have an LOI from is now considering us for three sites and for a much larger portion of the AI load. This may result in significantly more chiller sales than the original LOI."
Despite that optimistic outlook, the market hasn't been kind. The stock has dropped roughly 36% over the past month and recently touched a 52-week low of $1.55.
- RSI Value: 26.4
- TGEN Price Action: Shares of Tecogen fell 20.4% to close at $4.41 on Tuesday.
- The stock carries a momentum score of 94.71.
ZKH Group Ltd (ZKH)
On November 20, ZKH Group reported a third-quarter loss of 1 cent per share, which actually represented improvement from the year-ago loss of 6 cents per share. Chairman and CEO Eric Long Chen struck an upbeat tone about the quarter's performance.
"In the third quarter, we drove strengthening momentum in our business," Chen stated. "Our GMV and revenues returned to approximately prior-year levels, while higher-margin private-label GMV grew in the mid-teens year over year, further enhancing our profit mix. We expanded our customer base across both large corporations and SME customers, reflecting deeper customer penetration and share gains."
The positive commentary hasn't stopped the bleeding, though. The company's stock has fallen around 14% over the past five days and has a 52-week low of $2.50.
- RSI Value: 29.2
- ZKH Price Action: Shares of ZKH Group fell 13.6% to close at $3.18 on Tuesday.
Intercont (Cayman) Ltd (NCT)
Intercont (Cayman) Limited received a Nasdaq notification letter on December 19 regarding minimum bid price deficiency, which is never a good sign for any publicly traded company. When your stock price falls below $1 for an extended period, Nasdaq starts sending letters, and that's typically not the kind of mail you want to receive.
The damage has been substantial. The company's stock has crashed roughly 62% over the past month and currently trades near its 52-week low of $0.19.
- RSI Value: 27.5
- NCT Price Action: Shares of Intercont fell 6.3% to close at $0.22 on Tuesday.
What Does It Mean?
An oversold RSI doesn't automatically mean these stocks are screaming buys. It simply means they've experienced intense selling pressure recently. Sometimes stocks are oversold for good reasons, like deteriorating fundamentals or regulatory issues. Other times, the market overreacts to short-term news, creating potential opportunities for contrarian investors.
With Tecogen, you've got a company talking about expanded opportunities with data center customers just as its stock gets hammered. ZKH Group is showing operational improvement with narrowing losses and revenue growth, yet shares keep sliding. And Intercont is dealing with serious compliance issues that could result in delisting if not resolved.
The key is understanding why each stock is oversold before deciding whether the selling represents panic or prudence. Technical indicators like RSI can identify extremes in sentiment, but they work best when combined with fundamental analysis of what's actually happening with the underlying business.