If you’re looking for cheap stocks to buy right now, one strategy may be to look at stocks that are oversold. And you can find oversold stocks by using the Relative Strength Index, or RSI. It’s a momentum indicator which looks at the past 14 trading days. When there has been a lot of selling pressure on a stock, its RSI goes lower. And once it falls to below 30, a stock is considered oversold.
A top artificial intelligence stock that is oversold right now is Snowflake (NYSE:SNOW). The stock has been in oversold territory for all of June. And recently, the stock’s 20-day moving average dipped below its 50-day moving average, which is another bearish sign for Snowflake.
Analysts are worried that perhaps expectations are a bit too high for the stock, even after it recently raised its guidance. Year to date, Snowflake’s stock is down more than 30%. And it trades at a price-to-earnings-growth ratio (PEG) of 3.5. Normally the cutoff for a good growth stock is a PEG of 1.0 or less.
Snowflake’s stock is trading at a premium even despite its falling valuation this year. The company is under a new CEO and there’s a bit more risk than there was in the business a year ago.
For contrarian investors, however, who are bullish on artificial intelligence, now could be a good time to buy the stock for the long haul. But if you’re a risk-averse investor, Snowflake may not be the safest investment to be holding, particularly in the short term.
