Ford Motor Company (NYSE:F) has taken investors on a roller-coaster ride lately. From trading at a 52-week high just weeks ago, the stock is now in danger of hitting a new 52-week low as well.
The share price was already on its way down when Ford announced its Q4 results towards the end of January. And although the company had a strong quarter with sales up 7% and finishing well above expectations, Ford’s adjusted per-share earnings of $0.39 came in lower than the $0.42 that was expected by analysts.
In the past year, Ford’s stock has declined more than 12%, although it has stayed in a fairly narrow range between $10 to $13.
However, this recent sell-off looks to be exaggerated and there may be signs that a reversal could be coming. One indicator that I like to look at when assessing whether a stock is oversold is the Relative Strength Index (RSI). When the RSI level reaches under 30, that indicates that a stock has seen excessive selling lately and that a reversal could be in the cards.
As of Wednesday’s close, Ford had dipped to an RSI level of just 22, and marks the third consecutive day it has sat in an oversold position. The last time the share price was oversold was back in April and it would go on to make a modest recovery, but at the time the RSI level only reached 24.
It could be a great time to pickup the stock on a dip after what was a very strong Q4 performance despite the profit miss.
