As of September 4, 2024, investors focused on momentum in the consumer staples sector should be paying attention to two stocks exhibiting overbought signals. These signals are based on the Relative Strength Index (RSI), a momentum indicator that assesses a stock’s strength during price increases versus price decreases. An RSI value above 70 typically indicates an overbought asset, potentially suggesting a short-term price correction.
Altria Group Inc. (MO)
On August 22, Altria increased its quarterly dividend by 4.1% to $1.02 per share. The company’s stock price has risen approximately 10% over the past month, reaching a 52-week high of $54.48. However, the stock’s RSI currently sits at 79.57, signaling overbought conditions. Altria’s shares closed at $54.07 on Tuesday.
Kellanova (K)
Mars, Inc. announced its agreement to acquire Kellanova on August 14 for $83.50 per share, representing a valuation of $35.9 billion including assumed net leverage. Steve Cahillane, Kellanova’s Chairman, President, and CEO, highlighted the strategic fit between the two companies, stating, “This is a truly historic combination with a compelling cultural and strategic fit. Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realization of our full potential and our vision.” Kellanova’s stock has also gained approximately 10% over the past month, reaching a 52-week high of $80.97. The stock’s RSI value is currently at 81.98, further emphasizing overbought conditions. Kellanova shares closed at $80.16 on Tuesday.
Investors should carefully consider these overbought signals when making trading decisions for both Altria Group and Kellanova. While the companies have experienced positive developments, the high RSI values may indicate potential short-term price volatility.
