10 Oversold MidCap Stocks To Buy

Ramish Cheema
8 min read

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In this piece, we will take a look at ten oversold midcap stocks to buy. If you want to skip an introduction to technical trading and the stock market in general, then head on over to 5 Oversold MidCap Stocks To Buy.

August seems to have kicked off with speculation, worries, or beliefs that the Federal Reserve might have greater leeway when setting its terminal rate. The U.S. economy and the labor market in particular continue to demonstrate robust second quarter Among these, the latter is particularly worrying (if you don't want more interest rate hikes) since the central bank has linked the growth in inflation with a tight labor market. However, in a conundrum for policy makers, the wage growth rate is now higher than inflation rates, providing consumers with more leeway to make purchases. While this is good for the economy, since more purchases mean more spending and more growth, on the inflationary front, it also contributes to higher product demand and therefore higher prices.

The latest bit on the macroeconomic data, which helps guide interest rates, is the Labor Department's Employment Cost Index. This dataset shows that for the twelve months which ended in June, wages and salaries grew by 4.6% and compensation costs for civilian government and workers grew by 4.6%. Reading this data along with the latest inflation release sets the reading at 3% showing that wage growth is indeed leading inflation and providing breathing space to consumers that have battled record high price increases last year.

This optimism, which stems from a combination of falling inflation, strong wage growth, and a rising GDP, has started to reduce the market odds of a recession. However, if we're to take a look at historical odds and remove current factors from play, then the probability of a recession is high as out of the Fed's previous nine interest rate hiking cycles, seven did lead to a recession. In a recession, the service sector is one of the first to start laying off employees as customers reduce their spending and leisure activities. Yet, despite the high rate environment which makes taking debt more expensive, U.S. consumers are expected to see higher discretionary cash inflows according to Goldman Sachs' retail analyst Kate McShane.

These inflows, which basically measure the money available for discretionary spending such as jewelry and vacationing, have grown consecutively over the past six months and will end 2023 with this upward trend for a final growth of 3.2% believes the analyst. This prediction makes sense when we consider that ADP's latest private payrolls report once again significantly outpaced analyst estimates by showing that 324,000 jobs were added in July. It was also in line with the Labor Department's salary growth estimate of 4.6%, as the ADP dataset reports an even higher jump of 6.2% in annual pay. Additionally, and perhaps more importantly, the data also shows that the leisure and hospitality industries added more than two hundred thousand jobs. These jobs indicate that on the ground, at least when it came to July, the earliest signs of a recession that we have shared above had not materialized.

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