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In the search for potentially undervalued stocks, we ran a screen based on the theoretical assumption that if P/E is equal to a constant K, growth in EPS estimates should be matched by proportionate growth in price. When they don’t match up, a mispricing may have occurred.

We screened technically oversold stocks from the tech sector (with RSI(14) below 40) for those exhibiting this mis-match.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Click to enlarge


Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

List sorted by RSI(14).

1. Telecom Argentina S A (TEO): Provides fixed-line telecommunication services and other related services in Argentina. Market cap of $3.97B. RSI(14) at 30.50. Over the last 30 days, analyst projected EPS has increased 0.71% (from $2.83 to $2.85), while the price has decreased 16.10% (from $23.92 to $20.07). It has been a rough couple of days for the stock, losing 8.37% over the last week.

2. SunPower Corporation (SPWRA):
Designs, manufactures and delivers solar electric systems for residential, commercial and utility-scale power plant customers worldwide. Market cap of $1.25B. RSI(14) at 32.79. Over the last 30 days, analyst projected EPS has increased 3.41% (from $0.88 to $0.91), while the price has decreased 20.73% (from $15.87 to $12.58). This is a risky stock that is significantly more volatile than the overall market (beta = 2.09). The stock is a short squeeze candidate, with a short float at 20.08% (equivalent to 6.67 days of average volume). The stock has performed poorly over the last month, losing 19.4%.

3. GSI Group Inc. (GSIG): Designs, develops, manufactures and sells precision motion control devices and associated precision technologies, photonics-based solutions and semiconductor systems. Market cap of $280.56M. RSI(14) at 34.28. Over the last 30 days, analyst projected EPS has increased 8.05% (from $0.87 to $0.94), while the price has decreased 20.06% (from $10.57 to $8.45). The stock has performed poorly over the last month, losing 20.36%.

4. Perfect World Co., Ltd. (PWRD): Engages in the research, development, operation and licensing of online games primarily in the People's Republic of China, the United States and the Rest of Asia. Market cap of $872.48M. RSI(14) at 36.46. Over the last 30 days, analyst projected EPS has increased 19.85% (from $2.62 to $3.14), while the price has decreased 4.11% (from $18.25 to $17.50). It has been a rough couple of days for the stock, losing 7.5% over the last week.

5. TransAct Technologies Incorporated (TACT):
Designs, develops, assembles and markets transaction-based printers under the Epic and Ithaca brand names. Market cap of $83.25M. RSI(14) at 36.94. Over the last 30 days, analyst projected EPS has increased 1.75% (from $0.57 to $0.58), while the price has decreased 2.02% (from $8.90 to $8.72). It has been a rough couple of days for the stock, losing 5.27% over the last week.

6. SouFun Holdings Ltd. (SFUN): Provides marketing, listing, technology and information consultancy services to real estate and home furnishing industries in the People's Republic of China. Market cap of $1.27B. RSI(14) at 39.06. Over the last 30 days, analyst projected EPS has increased 9.45% (from $1.27 to $1.39), while the price has decreased 12.03% (from $19.70 to $17.33). The stock is a short squeeze candidate, with a short float at 84.25% (equivalent to 9.59 days of average volume). It has been a rough couple of days for the stock, losing 5.8% over the last week.

*EPS and price data sourced from Yahoo! Finance, all other data sourced from Finviz.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 6 Oversold Tech Stocks Undervalued By EPS Trends