This Stock's Crash Is Setting Up a Major Opportunity

In just seven months, one stock went from a top market performer to a bona fide crash victim.

This company wasn't part of the AI craze (where you usually find the highfliers these days). Instead, it benefited from another megatrend... the boom in prescription weight-loss drugs.

Its shares soared triple digits in less than a year and a half. But the stock peaked in mid-2024... And it has done nothing but fall since.

The selling hit a crescendo in recent weeks. The total decline was more than 40%. And the stock hit a rare "oversold" setup in the process.

The good news is, history shows this setup is a good sign for the stock. In fact, we could see a rally of 39% over the next year.

The weight-loss giant we're looking at today isn't a U.S. company. Instead, it's a Danish business with a century-plus of history.

Still, many investors had never thought much about Novo Nordisk (NVO)... that is, before the weight-loss craze of recent years began.

Novo Nordisk owns the drug Ozempic. The drug is mainly a treatment for diabetes. But because it can also cause weight loss, it has become a household name. Everyone has wondered whether it's a "miracle" weight-loss cure.

The excitement sent Novo Nordisk's revenue – and its share price – soaring. But that trend peaked halfway through 2024. Shares have been falling since then. And they recently hit oversold levels based on the relative strength index ("RSI").

The RSI looks at a stock's recent performance and tells us if a move has gone too far, too fast in either direction. A reading above 70 indicates a stock is "overbought." And a reading below 30 signals it's "oversold." In both cases, we expect the trend to reverse.

Novo Nordisk's recent decline sent the stock's RSI below 20. Take a look...

The stock has taken a beating in recent months. But according to the RSI, the move has gone too far, too fast. And that gives us a rare opportunity.

You see, it's rare for Novo to hit an RSI below 20. We've only seen eight similar setups over the past 40 years. And those have been fantastic buying opportunities. Take a look...

This stock has been an incredible long-term winner. It has led to typical annual gains of 17.6% over four decades. But you could have done even better if you bought after these RSI lows...

Similar oversold instances led to 4.4% gains in three months, 15.2% gains in six months, and massive 38.9% gains over a year. That's an incredible result... and more than double the typical annual return for the buy-and-hold strategy.

What's more, the stock was up 100% of the time a year later. And five out of eight cases led to a gain above 40%.

The market is clearly worried that the prescription weight-loss hype is overdone. But that isn't true. According to history, the sell-off has gotten ahead of itself... And with upside potential of 39% from here, Novo Nordisk is a stock to consider right now.

Good investing,

Brett Eversole