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The following is a list of oversold stocks, as defined by the Relative Strength, or RSI(14), indicator. All of the stocks mentioned below have RSI(14) values below 40, which usually signals oversold conditions.

In addition, all of these stocks have been more profitable than their competitors over the past five years (based on gross margin and net profit margin).

Think these profitable stocks are worth a closer look? We're not going to go into detailed analysis for each company, the goal here is to give you a starting point for your own analysis.

Profitability data sourced from Reuters, RSI(14) and short float data sourced from Finviz.

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1. Cogent Inc. (COGT): Business Software & Services Industry. Market cap of $931.04M. RSI(14) at 37.85. 5-year average gross margin at 62.08% vs. industry average at 25.16%. 5-year average net profit margin at 32.33% vs. industry average at 2.91%. Short float at 4.52%, which implies a short ratio of 1.19 days. The stock has gained 16.44% over the last year.

2. Clorox Corporation (CLX): Conglomerates Industry. Market cap of $8.75B. RSI(14) at 31.63. 5-year average gross margin at 42.79% vs. industry average at 7.12%. 5-year average net profit margin at 9.68% vs. industry average at 1.24%. Short float at 2.74%, which implies a short ratio of 3.15 days. The stock has gained 5.98% over the last year.

3. Church & Dwight Co. Inc. (CHD): Cleaning Products Industry. Market cap of $4.63B. RSI(14) at 39.05. 5-year average gross margin at 40.0% vs. industry average at 7.36%. 5-year average net profit margin at 8.02% vs. industry average at 1.28%. Short float at 4.07%, which implies a short ratio of 6.74 days. The stock has gained 11.9% over the last year.

4. Newell Rubbermaid Inc. (NWL): Housewares & Accessories Industry. Market cap of $4.83B. RSI(14) at 39.49. 5-year average gross margin at 33.77% vs. industry average at 7.36%. 5-year average net profit margin at 5.25% vs. industry average at 1.28%. Short float at 11.49%, which implies a short ratio of 8.18 days. The stock has gained 17.44% over the last year.

5. Philippine Long Distance Telephone Co. (PHI): Telecom Services Industry. Market cap of $10.53B. RSI(14) at 29.15. 5-year average net profit margin at 27.49% vs. industry average at 7.04%. Short float at 0.41%, which implies a short ratio of 5.27 days. The stock has gained 16.08% over the last year.

6. HCP, Inc. (HCP): REIT. Market cap of $10.59B. RSI(14) at 38.91. 5-year average gross margin at 81.71% vs. industry average at 49.11%. 5-year average net profit margin at 14.61% vs. industry average at 4.42%. Short float at 4.56%, which implies a short ratio of 4.63 days. The stock has gained 25.15% over the last year.

7. Mindray Medical International Limited (MR): Medical Instruments & Supplies Industry. Market cap of $2.98B. RSI(14) at 36.11. 5-year average gross margin at 54.92% vs. industry average at 47.57%. 5-year average net profit margin at 22.21% vs. industry average at 7.28%. Short float at 19.48%, which implies a short ratio of 13.23 days. The stock has lost -18.05% over the last year.

8. Kimberly-Clark Corporation (KMB): Personal Products Industry. Market cap of $25.36B. RSI(14) at 31.53. 5-year average gross margin at 31.46% vs. industry average at 24.47%. 5-year average net profit margin at 9.15% vs. industry average at 3.1%. Short float at 1.72%, which implies a short ratio of 2.53 days. The stock has gained 1.02% over the last year.

9. Alcon Inc. (ACL): Medical Instruments & Supplies Industry. Market cap of $49.96B. RSI(14) at 34.89. 5-year average gross margin at 75.49% vs. industry average at 50.62%. 5-year average net profit margin at 28.63% vs. industry average at 10.26%. Short float at 1.85%, which implies a short ratio of 1.74 days. The stock has gained 14.13% over the last year.

10. Discovery Communications, Inc. (DISCA): CATV Systems Industry. Market cap of $11.52B. RSI(14) at 36.35. 5-year average gross margin at 61.32% vs. industry average at 53.99%. 5-year average net profit margin at 14.5% vs. industry average at 5.84%. Short float at 8.1%, which implies a short ratio of 13.52 days. The stock has gained 31.63% over the last year.

11. Merck & Co. Inc. (MRK): Drug Manufacturers Industry. Market cap of $107.73B. RSI(14) at 34.58. 5-year average gross margin at 73.45% vs. industry average at 48.75%. 5-year average net profit margin at 27.82% vs. industry average at 13.5%. Short float at 0.74%, which implies a short ratio of 1.96 days. The stock has gained 9.36% over the last year.

12. DigitalGlobe, Inc. (DGI): Aerospace/Defense Industry. Market cap of $1.4B. RSI(14) at 36.85. 5-year average gross margin at 86.83% vs. industry average at 34.1%. 5-year average net profit margin at 20.15% vs. industry average at 9.98%. Short float at 2.85%, which implies a short ratio of 3.28 days. The stock has gained 30.85% over the last year.

13. Campbell Soup Co. (CPB): Processed & Packaged Goods Industry. Market cap of $12.1B. RSI(14) at 32.. 5-year average gross margin at 40.34% vs. industry average at 31.12%. 5-year average net profit margin at 10.01% vs. industry average at 5.26%. Short float at 10.52%, which implies a short ratio of 8.04 days. The stock has gained 13.9% over the last year.

14. Healthcare Realty Trust Inc. (HR): REIT. Market cap of $1.49B. RSI(14) at 37.65. 5-year average gross margin at 60.29% vs. industry average at 49.12%. 5-year average net profit margin at 8.23% vs. industry average at 4.35%. Short float at 5.92%, which implies a short ratio of 8.41 days. The stock has gained 18.86% over the last year.

15. Kellogg Company (K): Processed & Packaged Goods Industry. Market cap of $18.02B. RSI(14) at 35.12. 5-year average gross margin at 43.48% vs. industry average at 31.12%. 5-year average net profit margin at 9.34% vs. industry average at 5.26%. Short float at 2.56%, which implies a short ratio of 3.42 days. The stock has lost -4.3% over the last year.

16. Valeant Pharmaceuticals International (VRX): Drug Delivery Industry. Market cap of $7.66B. RSI(14) at 37.25. 5-year average gross margin at 76.01% vs. industry average at 48.75%. 5-year average net profit margin at 23.59% vs. industry average at 13.5%. Short float at 5.96%, which implies a short ratio of 4.66 days. The stock has gained 96.59% over the last year.

17. General Mills Inc. (GIS): Processed & Packaged Goods Industry. Market cap of $23.16B. RSI(14) at 37.31. 5-year average gross margin at 36.61% vs. industry average at 31.12%. 5-year average net profit margin at 8.85% vs. industry average at 5.26%. Short float at 1.52%, which implies a short ratio of 2.1 days. The stock has gained 11.64% over the last year.

18. AstraZeneca PLC (AZN): Drug Manufacturers Industry. Market cap of $70.41B. RSI(14) at 31.39. 5-year average gross margin at 80.12% vs. industry average at 58.79%. 5-year average net profit margin at 20.84% vs. industry average at 13.98%. Short float at 0.44%, which implies a short ratio of 6.06 days. The stock has gained 13.49% over the last year.

19. Kraft Foods Inc. (KFT): Food Industry. Market cap of $53.49B. RSI(14) at 36.19. 5-year average gross margin at 34.94% vs. industry average at 31.12%. 5-year average net profit margin at 7.06% vs. industry average at 5.26%. Short float at 1.39%, which implies a short ratio of 2.77 days. The stock has gained 20.03% over the last year.

20. Rockwell Collins Inc. (COL): Aerospace/Defense Products & Services Industry. Market cap of $9.39B. RSI(14) at 38.11. 5-year average gross margin at 44.42% vs. industry average at 34.1%. 5-year average net profit margin at 13.05% vs. industry average at 9.98%. Short float at 1.66%, which implies a short ratio of 2.58 days. The stock has gained 15.01% over the last year.

Disclosure: No positions

Source: 20 Oversold and Highly Profitable Companies