Investors looking for momentum plays in the utilities sector might want to take a closer look at two stocks currently flashing overbought signals: Sunnova Energy International (NYSE: NOVA) and FirstEnergy Corp (FE). The Relative Strength Index (RSI) is a widely used momentum indicator that helps traders gauge a stock’s strength relative to its recent price movements. An RSI reading above 70 typically indicates an overbought condition, suggesting that the stock’s price may be due for a correction.
Sunnova Energy International, on August 21, saw its RSI reach 70.07. The company’s stock has enjoyed a strong run, gaining approximately 21% over the past five days and reaching a 52-week high of $16.36. Despite this recent surge, Morgan Stanley analyst Andrew Percoco maintained an Equal-Weight rating on the stock and raised its price target from $11 to $13. Sunnova Energy closed at $9.67 on Tuesday, up 0.4%.
FirstEnergy Corp, on the other hand, saw its RSI climb to 74.15 on August 20. The stock has also experienced strong gains, increasing by around 9% over the past month and hitting a 52-week high of $43.65. Scotiabank analyst Andrew Weisel maintained a Sector Perform rating on FirstEnergy and raised its price target from $40 to $45. FirstEnergy shares ended Tuesday’s trading at $43.19, up 0.8%.
While both Sunnova Energy and FirstEnergy are showing positive signs, their elevated RSI levels suggest that their recent price gains might be unsustainable in the short term. Investors should carefully consider these signals before making any trading decisions.
