After weeks of intense market volatility, the Dow Jones exploded more than 1,000 points, as stocks just begin to recover from a Christmas Eve meltdown.

“Investors went bargain shopping the day after Christmas, where stocks just got too cheap relative to earnings, future earnings, any reasonable assessment of earnings,” said Chris Rupkey, managing director of MUFG, as quoted by CNN. “The coast is clear, back up the truck, investors are saying enough already, the world is not ending.”

However, one day of upside does not establish a trend.  But there’s hope it’ll continue.

Stay tuned for more on this developing story.

For the time being, here’s a list of the most oversold stocks on the market.

Hot Stock No. 1 – Etsy Inc. (ETSY)

Etsy, Inc. operates as a commerce platform to make, sell, and buy goods online and offline worldwide. Its platform includes its markets, services, and technology, which enabled users to engage its community of sellers and buyers. The company offers approximately 45 million items across approximately 50 retail categories to buyers. It also provides various seller services, including direct checkouts, promoted listings, and shipping labels, as well as Pattern by Etsy to create custom Websites; and seller tool and education resources to start, manage, and scale businesses to entrepreneurs primarily through Etsy.com.

We’ve had our eye on ETSY since $15.65.  Since then, it’s rocketed as high as $58 – an all-time high.  And we strongly believe the now-oversold stock could easily see higher highs.  In recent weeks, it pulled back with the broader market to excessively oversold conditions to $43.85.  In addition, earnings continue to improve, as well.  In fact, the company just reported EPS of 15 cents, beating estimates of seven cents.  Revenue was $150.3 million, beating expectations for $149.9 million.

Hot Stock No. 2 – Fate Therapeutics (FATE)

Fate Therapeutics is a clinical-stage biopharmaceutical company that develops programmed cellular immunotherapies for cancer and immune disorders worldwide. Its immuno-oncology product candidates include FATE-NK100, a natural killer (NK) cell cancer immunotherapy that consists of adaptive memory NK cells; engineered hnCD16 induced pluripotent stem cells (iPSC)-derived natural killer cell therapy candidates for hematologic/solid tumors; and engineered chimeric antigen receptor iPSC-derived T cell therapy product candidates for hematologic/solid tumors.

We still like it here thanks to two key announcements on its FATE-NK100 treatment for its natural killer cell cancer immunotherapy, and news that the FDA just accepted its investigational new drug (IND) application for FT500 – a potential natural killer cell immunotherapy.

“The safety and clinical benefit observed with a single infusion of FATE-NK100 as a monotherapy in heavily pre-treated cancer patients, including in refractory AML patients that have high leukemic blast burden in the marrow and in advanced solid tumor patients with progressive disease, are encouraging,” said Sarah Cooley, M.D., Associate Professor of Medicine, Division of Hematology, Oncology and Transplantation at the University of Minnesota and the lead investigator of the VOYAGE study. As things progress for the stock, we strongly believe it could rally to $25, near-term.

Hot Stock No. 3 – Teva Pharmaceuticals (TEVA)

Teva Pharmaceuticals develops, manufactures, markets, and distributes generic medicines and a portfolio of specialty medicines worldwide. It operates through two segments, Generic Medicines and Specialty Medicines.

For some time, the issue for TEVA was its debt load.  However, after getting rid of non-core assets, layoffs, and its dividend, it’s on course to save $3 billion a year by 2019.  While that doesn’t take it out of the woods, it’s a step in the right direction.  In addition, the outlook for generic drug pricing is also just beginning to improve, especially as medical care inflation continues to push higher.  At the moment, TEVA is very cheap at just 5x 2019 profits.  Technically, the stock is oversold at bottom of trend.  We’d like to see a near-term bearish gap refill around $24 from $14.85.

Disclaimer

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