10 Profitable and Oversold Stocks Ready To Move Higher

NEW YORK (TheStreet) -- As difficult as it may be at times, acquiring stocks when they are despised by others demonstrates an ability to separate sensation from logic. Companies become oversold when passion takes over in the market and plunges the prices lower.

The desire to escape the suffering of additional losses results in many selling at the particular instant they should buy.

Of course, sporadically stocks become oversold as a result of proper money-management stop-losses activated. Having a stop-loss is imperative to investing endurance and your exit strategy must be put in place afore contemplating an entry.

Typically, stocks do not become oversold on a daily or weekly timeframe because of stop-losses triggered. It's more often the outcome of emotion dictating selling, and emotional dumping sets up our opportunity.

Here is a list of 10 candidate companies that are oversold on my charts. My ideal technique to exploit the weakness is to sell put options or write covered calls (pretty much the same thing). The typical trade lasts three to four weeks.

TRW Automotive Holdings (TRW)

Background:

TRW trades an average of 1.2 million shares per day with a market cap of $4.1 billion.

Six out of 7 analysts now rate TRW a strong buy, up from five analysts a month ago. Shares have fallen 34.4% in the last year, and the average analyst target price for TRW is $61.88. TRW Free Cash Flow Chart TRW Free Cash Flow data by YCharts

The last date TRW released earnings was May 1, and the closing price before earnings was $45.99. Based on a recent price of $33.60, shares are down 25.3%.

TRW is oversold on the daily chart while still in an upward weekly chart trend.

The company has rising revenue year-over-year of $16.24 billion in the last fiscal year compared to $14.38 billion in the previous year. The company's earnings before interest and taxes are rising with an EBIT year-over-year of $1.26 billion for the last fiscal year from $1.18 billion for the previous annual report.

I like the September$30 put during the next few trading days for 50 cents or greater. My profit target is 40 cents or close out on option expiration date.

Tiffany & Co. (TIF)

Background:

Tiffany operates jewelry stores and trades an average of 2.4 million shares per day with a market cap of $6.9 billion.

52-week range: $50.29 to $81.72

TIF Free Cash Flow Chart TIF Free Cash Flow data by YCharts

Over half the analysts covering Tiffany rate it as a buy or strong buy, and none of the analysts recommend selling. Investors are receiving $1.28 in dividends for a yield of 2.34%.

Shares have moved higher in the last month with a 5.9% improvement. In the previous Tiffany's earnings release on May 24, the closing price before earnings was $57.59. In comparison to a recent price of $56, shares are down 1.8%.

Tiffany is oversold on the daily chart and bounced higher at $50, while still in an upward weekly chart trend.

I like the September $50 put during the next few trading days for $1.10 or greater. My profit target is 85 cents or close out on option expiration date. TSN Chart TSN data by YCharts

Tyson Foods (TSN)

Background:

Tyson trades an average of 7.2 million shares per day with a market cap of $5.4 billion.

52-week range: $14.78 to 20.91

The average analyst target price for Tyson is $20.46.

The mean fiscal year estimate price-to-earnings ratio is 7.58, based on earnings of $1.95 per share this year. Investors are receiving 16 cents in dividends for a yield of 1.08%.

Tyson is oversold on the daily chart. On the weekly chart, Tyson broke through the 200-week moving average of $15.50. Breaks in this major average typically get tested at least once shortly after a break.

I like the September $14 put during the next few trading days for 50 cents or greater. My profit target is 35 cents or close out on option expiration date. KR Chart KR data by YCharts

The Kroger Co. (KR)

Background:Kroger trades an average of 7.5 million shares per day with a market cap of $11.6 billion.

52-week range: $21.11 to 24.98

Shares have fallen 14.9% in the last year, and the average analyst target price for Kroger is $26.13.

Investors are receiving 46 cents in dividends for a yield of 2.18%.

Kroger's last quarterly earnings release was June 14, and the previous closing price was $22.58. Relative to a current price of $21.49, shares are down 2.3%.

Kroger is oversold on the daily chart and support on the weekly chart has held (so far) this week after a test.

I like the September $20 put during the next few trading days for 35 cents or greater. My profit target is 25 cents or close out on option expiration date. LVS Chart LVS data by YCharts

Las Vegas Sands (LVS)

Background:

The Sands is a hotel and casino, and trades an average of 10.7 million shares per day with a market cap of $30.9 billion.

52-week range: $36.71 to 61.05

Analysts are in love with this company. The Sands is sporting 19 buy or strong buy from a total of 21 analysts covering the company. The average analyst target price for LVS is $58.50.

The mean fiscal year estimate price-to-earnings ratio is 14.48, based on earnings of $2.65 per share this year. Investors are receiving $1 in dividends for a yield of 2.6%.

The Sands is oversold on the daily chart and support on the weekly chart is $29.80. The legal issues with Macau and the former head of a casino will darken the stock for a while.

I like the September $30 put during the next few trading days for 50 cents or more. My profit target is 35 cents or close out on option expiration date. BSX Chart BSX data by YCharts

Boston Scientific (BSX)

Background:

Boston Scientific trades an average of 10.9 million shares per day with a market cap of $7.6 billion.

52-week range: $5.09 to 7.28

The average analyst target price for Boston Scientific is $7.13.

The mean fiscal year estimate price-to-earnings ratio is 12.15, based on earnings of 43 cents per share this year.

The company has falling revenue year-over-year of $7.62 billion last fiscal year compared to $7.81 billion in the previous year. The bottom line has rising earnings year-over-year of $441 million last fiscal year compared to a loss of $1.07 billion in the previous year.

Boston Scientific is oversold on the daily chart, but not the weekly.

I don't care for this one as much as most of the others. This is more of a wild-card play. The best trade appears to be the $4 September calls for $1.03. My profit target is 65 cents or close out on option expiration date.

SWY Chart SWY data by YCharts

Safeway (SWY)

Background:

Safeway is a food and drug retailer and trades an average of 12.2 million shares per day with a market cap of $3.6 billion.

52-week range: $15.26 to 22.95

Shares have fallen 26.2% in the last year, and the average analyst target price for Safeway is $19.75. Investors are receiving 70 cents in dividends for a yield of 4.59%.

In the last month the stock has fallen 11.8%. The last date Safeway released earnings was June 19, 2012, and the closing price before earnings was $15.80. Based on a recent price of $15.05, shares are down 0.3%.

Safeway is oversold on the daily chart and the odds of a retest of $15.60+ is high enough to justify an make Safeway a bounce candidate.

I like the September $14 put during the next few trading days for 45 cents or more. My profit target is 35 cents or close out on option expiration date.

ACI Chart ACI data by YCharts

Arch Coal (ACI)

Background:

Arch Coal is engaged in the mining of coal and trades an average of 12.7 million shares per day with a market cap of $1.1 billion.

52-week range: $5.54 to $28.30

Earnings are expected before the market opens Friday. The consensus estimate is currently a loss of 18 cents a share, a decline of 62 cents from the corresponding period last year.

Shares have fallen 79.7% in the last year, and the average analyst target price for ACI is $10.58. Investors are receiving 12 cents in dividends for a yield of 2.17%.

Arch Coal is oversold on the daily and weekly charts. Earnings makes it a little tough but I like the September $5 put during the next few trading days for about 65 cents or more. My profit target is 55 cents or close out on option expiration date.

DELL Chart DELL data by YCharts

Dell (DELL)

Background:

Dell trades an average of 18 million shares per day with a market cap of $20.2 billion.

52-week range: $11.56 to 18.32

Shares have fallen 30.1% in the last year, and the average analyst target price for DELL is $16.09.

The trailing 12-month price-to-earnings ratio is 5.7 and the mean fiscal year estimate price-to-earnings ratio is 6.02, based on earnings of $1.92 per share this year.

In the last month the stock has fallen 3%. DELL's latest earnings release was May 22 and the previous closing price was $15.08. Relative to a current price of $11.84, shares are down 21.1%.

Dell is oversold on the daily chart and is near support on the weekly chart.

I like the September $11 put during the next few trading days for 38 cents or more. My profit target is 30 cents or close out on option expiration date.

HPQ Chart HPQ data by YCharts

Hewlett-Packard (HPQ)

Background:

Hewlett-Packard trades an average of 20.3 million shares per day with a market cap of $35.1 billion.

52-week range: $17.99 to 37.47

Shares have fallen 51.7% in the last year, and the average analyst target price for HPQ is $26.44.

The mean fiscal year estimate price-to-earnings ratio is 4.44, based on earnings of $4.05 per share this year. Investors are receiving 53 cents in dividends for a yield of 2.94%.

In the last month the stock has fallen 7.1%. May 23 was the last earnings release; the closing price before then was $21.08. Relative to a current price of $17.91, shares are down 14.7%.

HP is oversold on the weekly chart and is nearly oversold on the daily.

I like the September $17 put during the next few trading days for 70 cents or more. My profit target is 60 cents or close out on option expiration date.

>>To see these stocks in action, visit the 10 Profitable and Oversold Stocks Ready To Move Higher portfolio on Stockpickr.

At the time of publication the author did not hold a position in any stock mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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