As of Sept. 6, 2024, investors focused on momentum might want to take notice of four stocks in the financials sector that are showing signs of being overbought. The Relative Strength Index (RSI) is a key indicator of momentum, comparing a stock’s strength on up days to its strength on down days. An RSI above 70 generally signals an asset is overbought. Here’s a closer look at these four companies:
Virtu Financial Inc (VIRT)
On July 18, Virtu Financial reported better-than-expected second-quarter results, prompting its board to declare a quarterly cash dividend of 24 cents per share. This dividend is payable on Sept. 15 to shareholders of record as of Sept. 1. The company’s stock has seen a surge of around 14% over the past month, reaching a 52-week high of $31.75. As of Sept. 6, Virtu Financial’s RSI sits at 83.52, a clear indication of being overbought.
KKR Real Estate Finance Trust Inc (KREF)
KKR Real Estate Finance Trust followed suit with upbeat quarterly results on July 22. This positive news has driven the company’s stock up approximately 15% over the past month, reaching a 52-week high of $14.12. While KREF’s RSI isn’t as high as Virtu Financial’s, it’s still hovering at 70.54, placing it firmly in overbought territory.
Heritage Insurance Holdings Inc (HRTG)
On August 6, Heritage Insurance announced strong quarterly earnings, with CEO Ernie Garateix highlighting their continued focus on underwriting and rate adequacy. The company’s stock has seen a remarkable surge of about 124% over the last month, reaching a 52-week high of $16.90. Its RSI stands at 75.73, confirming its overbought status.
First Northwest BanCorp (FNWB)
First Northwest Bancorp reported better-than-expected quarterly sales on July 25. The company has been proactive in restructuring its balance sheet, including a sale-leaseback transaction for branches and various securities transactions. This strategy has propelled the company’s stock up by around 17% over the past month, reaching a 52-week high of $16.12. First Northwest BanCorp’s RSI is currently at 72.83, also indicating overbought conditions.
While these companies have demonstrated impressive growth in recent months, investors should be mindful that overbought stocks are prone to corrections. This means a potential downward swing in price is a real possibility. It’s crucial for investors to conduct thorough due diligence and consider their own risk tolerance before making any investment decisions.
