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Oversold Stock of the Day: Servotronics (SVT)

Oversold Stock of the Day: Servotronics (SVT)

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  • In a market near all-time highs and firing on all cylinders, it’s tough to find oversold companies, but there are a few. Servotronics (SVT) is throwing off oversold readings following a large decline this month.

    The manufacturer of control components for aerospace – as well as cutlery products—has seen tough times as air travel has dwindled. However, with the advent of a Covid vaccine, air travel is likely to start trending higher, and possibly rise to pre-pandemic levels within a few years.

    That makes this small-cap play a potential winner, as airlines constantly need maintenance and replacement parts. Despite a revenue drop, the company has managed to eke out a profit and trade at just 5 times earnings. Also, insiders own over 56 percent of shares, so they’re likely to manage the company in a way favorable to owners.

    With shares down over 15 percent this month, they look oversold and ready to move higher. Shares are trading well below their moving averages. Even worse, the stock’s relative strength index, or RSI, has fallen into the 26 range. That’s deep into oversold territory.

    Action to take: This is an extremely small-cap company, so there are no options trades. Traders can still take advantage of the low share price and buy shares up to $7.50. Traders should use a limit order to ensure they don’t end up overpaying to get into the trade.

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