3 Oversold Large-Caps That Look Ripe for a Rebound
Even in a market sitting near all-time highs, not every large-cap is keeping pace. A growing number of quality names have quietly slipped into oversold territory, creating fresh opportunities for investors with an appetite for risk. Three that stand out right now are Cintas Corp (NASDAQ: CTAS), Fastenal Co (NASDAQ: FAST), and Gen Digital Inc (NASDAQ: GEN).
Each stock has fallen sharply since August, yet their business fundamentals remain broadly intact. With deeply oversold technical readings and supportive analyst commentary, these three could be among the next rebound candidates as the broader market regains momentum. Let’s jump in and take a closer look.
Cintas: Beaten Down Despite Solid Results
Shares of Cintas, the company best known for its corporate uniform, cleaning, and safety supply services, have endured a steady selloff since August, falling nearly 20%. It’s worth noting, however, that the slide seems to have been driven more by valuation anxiety than by deteriorating fundamentals.
Over the summer, Cintas’ price-to-earnings (P/E) ratio reached one of the highest levels in its history, near 55, which left it vulnerable to profit-taking as market sentiment cooled. But that premium has now compressed to around 40, a more reasonable level for a business with Cintas’ consistency and margins.
Adding to the sense that the bears might have run their race is the fact that last month’s quarterly report was solid. Earnings came in line with expectations, revenue topped forecasts, and management even raised full-year guidance. Yet, the stock continued to slide, closing Thursday at a new low with an RSI reading of just 19, indicating extremely oversold conditions.
For long-term investors, that combination of resilient fundamentals and a technical setup that's this oversold can often make for the perfect entry point. If Cintas shares can show they’re capable of stabilizing and consolidating at current levels, the stock should be able to rebuild momentum into year-end.
Fastenal: Analyst Support Strengthens the Bullish Case
Fastenal, the industrial and construction supply distributor, has faced a similar fate. After hitting all-time highs in August, the stock has fallen more than 15%, weighed down by an earnings report earlier this week that failed to excite investors.
Revenue was in line, but earnings missed expectations, triggering a wave of selling in Monday’s session that hasn’t really stopped. However, the decline is already looking fairly overdone. The stock’s RSI has dropped into the low 20s, while several analysts are remaining optimistic about its outlook.
For instance, the team over at Robert Baird reiterated an Outperform rating on Tuesday, paired with a fresh $49 price target. Fastenal closed Thursday evening below the $42 mark, which implies close to 20% in targeted upside.
Like Cintas, Fastenal’s long-term fundamentals remain fairly robust: it has a broad customer base, boasts disciplined cost control, and has a 26-year track record of dividend growth. Fastenal looks well-positioned to recover if the wider industrial sector strengthens on falling inflation and stable demand.
Gen Digital: Still a Market Leader
Gen Digital, the cybersecurity and consumer software company behind brands like Norton and Avast, has been sliding since August as well, down nearly 20%. The stock has been stuck in a multi-year trading range, and it has been unable to break to new highs since 2017, but that stagnation may be creating opportunities.
Despite the drop, Gen’s fundamentals remain solid. The company’s August earnings report topped analyst expectations for both revenue and earnings, while its total addressable market and market leader position look increasingly attractive. At just $26 per share right now, Gen Digital is trading below even the cautious analyst price targets in the $30 range from Morgan Stanley and Jefferies, who rate the stock Equal Weight and Hold, respectively.
With an RSI of 27, the stock is firmly oversold, helping make its risk/reward profile quite attractive right now. If sentiment stabilizes and the company continues to execute on the basics, a move back toward the low $30s should be achievable in the coming months.
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