Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a top Canadian bank stock. And while bank stocks have been taking a beating of late due to the failure of Silicon Valley Bank, that doesn't change the fact that TD remains a stalwart in the industry. That's why buying the stock right now can be an excellent opportunity for investors.
One way for investors to find oversold stocks that have fallen sharply in value is by using the Relative Strength Index (RSI). RSI looks at a stock's trading activity over the past 14 trading todays. And the worse a stock has been performing, the lower the RSI value is. When it falls below 30, it is considered oversold. Last week, TD's stock fell to an RSI of less than 19 – indicating it is heavily oversold.
Investors should buy oversold stocks because they offer the potential for significant gains. When a stock is oversold, its price may be artificially depressed, and it may be trading below its intrinsic value. As the market adjusts and the stock's price begins to recover, investors who bought at the lower price may be able to sell for a profit.
Given TD's strong fundamentals, now may be an excellent time to add it to your portfolio. It's trading near its 52-week low and its yield is up around 5% -- a fantastic yield for one of Canada's top bank stocks. Investors who don't buy now could regret missing out on the opportunity later on as this is a great long-term buy.
