Advertisement
Canada markets closed

  • S&P/TSX

    21,807.37
    +98.93 (+0.46%)
     

  • S&P 500

    4,967.23
    -43.89 (-0.88%)
     

  • DOW

    37,986.40
    +211.02 (+0.56%)
     

  • CAD/USD

    0.7275
    +0.0012 (+0.16%)
     

  • CRUDE OIL

    83.24
    +0.51 (+0.62%)
     

  • Bitcoin CAD

    88,518.38
    +1,173.90 (+1.34%)
     

  • CMC Crypto 200

    1,334.09
    +21.46 (+1.64%)
     

  • GOLD FUTURES

    2,406.70
    +8.70 (+0.36%)
     

  • RUSSELL 2000

    1,947.66
    +4.70 (+0.24%)
     

  • 10-Yr Bond

    4.6150
    -0.0320 (-0.69%)
     

  • NASDAQ

    15,282.01
    -319.49 (-2.05%)
     

  • VOLATILITY

    18.71
    +0.71 (+3.94%)
     

  • FTSE

    7,895.85
    +18.80 (+0.24%)
     

  • NIKKEI 225

    37,068.35
    -1,011.35 (-2.66%)
     

  • CAD/EUR

    0.6824
    +0.0003 (+0.04%)
     

CTO Realty (CTO) Loses 11.5% in 4 Weeks, Here's Why a Trend Reversal May be Around the Corner

Zacks Equity Research
·2 min read

CTO Realty (CTO) has been on a downward spiral lately with significant selling pressure. After declining 11.5% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier.

How to Determine if a Stock is Oversold

We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price movements.

RSI oscillates between zero and 100. Usually, a stock is considered oversold when its RSI reading falls below 30.

ADVERTISEMENT

Technically, every stock oscillates between being overbought and oversold irrespective of the quality of their fundamentals. And the beauty of RSI is that it helps you quickly and easily check if a stock's price is reaching a point of reversal.

So, by this measure, if a stock has gotten too far below its fair value just because of unwarranted selling pressure, investors may start looking for entry opportunities in the stock for benefitting from the inevitable rebound.

However, like every investing tool, RSI has its limitations, and should not be used alone for making an investment decision.

Why a Trend Reversal is Due for CTO

The heavy selling of CTO shares appears to be in the process of exhausting itself, as indicated by its RSI reading of 28.03. So, the trend for the stock could reverse soon for reaching the old equilibrium of supply and demand.

The RSI value is not the only factor that indicates a potential turnaround for the stock in the near term. On the fundamental side, there has been strong agreement among the sell-side analysts covering the stock in raising earnings estimates for the current year. Over the last 30 days, the consensus EPS estimate for CTO has increased 13.3%. And an upward trend in earnings estimate revisions usually translates into price appreciation in the near term.

Moreover, CTO currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than the 4,000 stocks that we rank based on trends in earnings estimate revisions and EPS surprises. This is a more conclusive indication of the stock's potential turnaround in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research