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The following is a list of overbought stocks, as defined by the Relative Strength, or RSI(14), indicator. All of the stocks mentioned below have RSI(14) values above 70, which usually signal overbought conditions.

To control the quality of this list, we only focused on stocks with market caps north of $300M.

In addition, all of these stocks are undervalued, when comparing the current price with the average analyst target price (used as a proxy for fair value).

Yes, there are many limitations to this approach of finding undervalued companies, but the goal here is to give you a starting point for your own analysis.

Technical indicators suggest these companies are overbought, but analysts think there's more upside to these names. What do you think?

Analyst target prices and short float data sourced from Finviz. (Data sourced Monday evening, based on yesterday's closing prices)

(Click for expanded images)



The list has been sorted by the discount to average analyst target prices.

1. Exide Technologies (XIDE): Industrial Electrical Equipment Industry. Market cap of $612.54M. RSI(14) at 71.27. Monday's closing price at $7.98 vs. target price of $10.05 (discount of 20.6%). Short float at 4.36%, which implies a short ratio of 4.97 days. The stock has gained 4.59% over the last year.

2. Electro Scientific Industries Inc. (NASDAQ:ESIO): Diversified Electronics Industry. Market cap of $419.23M. RSI(14) at 77.56. Monday's closing price at $14.93 vs. target price of $17.75 (discount of 15.89%). Short float at 2.7%, which implies a short ratio of 7.75 days. The stock has gained 51.88% over the last year.

3. Genesco Inc. (NYSE:GCO): Apparel Stores Industry. Market cap of $930.01M. RSI(14) at 72.19. Monday's closing price at $38.67 vs. target price of $44.29 (discount of 12.69%). Short float at 5.61%, which implies a short ratio of 7.26 days. The stock has gained 44.83% over the last year.

4. Nuance Communications, Inc. (NASDAQ:NUAN): Application Software Industry. Market cap of $5.27B. RSI(14) at 75.66. Monday's closing price at $17.94 vs. target price of $20.36 (discount of 11.89%). Short float at 7.18%, which implies a short ratio of 8.38 days. The stock has gained 19.6% over the last year.

5. Questcor Pharmaceuticals, Inc. (NASDAQ:QCOR): Biotechnology Industry. Market cap of $903.95M. RSI(14) at 77.99. Monday's closing price at $14.54 vs. target price of $16.5 (discount of 11.88%). Short float at 14.93%, which implies a short ratio of 10.2 days. The stock has gained 239.72% over the last year.

6. Dollar Financial Corp. (NASDAQ:DLLR): Credit Services Industry. Market cap of $646.54M. RSI(14) at 71.89. Monday's closing price at $26.53 vs. target price of $29.69 (discount of 10.64%). Short float at 7.13%, which implies a short ratio of 8.12 days. The stock has gained 11.33% over the last year.

7. Eagle Rock Energy Partners, L.P. (NASDAQ:EROC): Oil & Gas Refining & Marketing Industry. Market cap of $668.42M. RSI(14) at 74.25. Monday's closing price at $7.90 vs. target price of $8.83 (discount of 10.53%). Short float at 1.43%, which implies a short ratio of 3.87 days. The stock has gained 74.78% over the last year.

8. CAI International Inc. (NYSE:CAP): Rental & Leasing Services Industry. Market cap of $358.38M. RSI(14) at 73.72. Monday's closing price at $20.01 vs. target price of $22.33 (discount of 10.39%). Short float at 3.27%, which implies a short ratio of 6.88 days. The stock has gained 150.75% over the last year.

9. Oritani Financial Corp. (NASDAQ:ORIT): Regional Bank. Market cap of $637.87M. RSI(14) at 75.3. Monday's closing price at $11.35 vs. target price of $12.50 (discount of 9.2%). Short float at 2.99%, which implies a short ratio of 4.47 days. The stock has lost -6.35% over the last year.

10. Cheniere Energy, Inc. (NYSEMKT:LNG):
Oil & Gas Drilling & Exploration Industry. Market cap of $340.65M. RSI(14) at 71.7. Monday's closing price at $5.91 vs. target price of $6.50 (discount of 9.08%). Short float at 19.12%, which implies a short ratio of 9.07 days. The stock has gained 203.08% over the last year.


Disclosure: No positions

Source: 10 Overbought Stocks That Could Be Undervalued