The recent turbulence in the stock market has created a silver lining, as many stocks have been pushed into “oversold” territory. If you’re a long-term investor or if you think that the stock market will bounce back soon, it’s a good idea to buy up the dips in these stocks. Stocks that have been battered by market forces but have good fundamentals are worth keeping at the top of your list.
Here are two worth considering:
Oversold Stock #1: Atlas Lithium
Atlas Lithium (ATLX) is a mineral exploration company based in Brazil. It has seen significant volatility, but it is well-positioned to capitalize on the growing demand for electric vehicle (EV) batteries. The escalating trade war with China could benefit companies elsewhere since some Chinese imports now face up to 245% tariffs. China is a major producer of batteries and the underlying critical minerals. Nearshoring is something that could shift supply chains closer to the U.S., which could then make it much more efficient to source minerals from Brazil.
The company plans to ramp up production by 2026, and investing before it does so could help investors realize significant gains. The recent dip is something I see as a buying opportunity.
Regardless, do keep in mind that lithium (LMV25) prices have not been conducive to bullish price action here. There are oversupply concerns due to new mines coming online globally and electric vehicle demand being much lower than initially anticipated.
ATLX is still a loss-making company that has diluted its shareholders. Its outstanding shares have increased from 1.51 million in 2019 to 16.973 million today. Investors may not be comfortable holding it for the long term, but it could be a bet on a spike in lithium prices or positive earnings growth.
The mean price target of $24 implies over 500% upside potential.
Oversold Stock #2: The Lovesac Company
Lovesac (LOVE) is a furniture company best known for its Sactionals and Sacs. it delivered a surprisingly resilient earnings report in a murky retail environment. Annual revenue did decrease to $680.6 million from $700.3 million last year, but the company’s Q4 results beat Wall Street expectations on both the top and bottom lines with net sales of $241.5 million vs. the $228 million expected. EPS is also up from $1.87 to $2.13.
Lovesac is guiding for fiscal 2026 net sales between $700 million and $750 million, with adjusted EBITDA expected to surpass consensus estimates.
The stock currently sits near $20 and is up only 1% in the past year. Year-to-date performance has been dismal as it is down 14.1%, but the recent earnings beat has caused it to surge by over 67% from its trough. Lovesac's higher-than-normal inventory levels could pressure margins if consumer demand softens further and it sources heavily from foreign countries, but Lovesac has reduced its dependence on China significantly. Now, input mostly comes from Vietnam, Malaysia, Indonesia, and Mexico.
If it keeps beating estimates going forward, I expect solid upside. The mean price target at $31.67 implies 55% upside from here.
