Top 2 Materials Stocks That Are Ticking Portfolio Bombs

TMC the metals company (TMC) and Sasol Ltd (SSL) are exhibiting overbought conditions based on their Relative Strength Index (RSI), signaling potential short-term corrections. TMC's RSI is 76.8 after the stock jumped 44% in the past month, closing at $4.72 on Wednesday, following a wider-than-expected first-quarter loss and the submission of a commercial recovery permit application. Sasol's RSI is 71 after gaining 26% in the past month, closing at $4.51 on Wednesday, subsequent to Capital Markets Day updates.

Analysis

Two materials sector stocks, TMC the metals company Inc. (TMC) and Sasol Ltd. (SSL), are exhibiting overbought conditions as of May 29, 2025, based on their Relative Strength Index (RSI), signaling a potential caution for momentum-focused investors. TMC's RSI reached 76.8 after its stock surged approximately 44% over the past month, closing at $4.72 on Wednesday; this price rally, supported by a high Edge Stock Ratings momentum score of 99.38, occurred despite the company reporting a wider-than-expected first-quarter loss. Concurrently, TMC highlighted significant strategic developments, with Chairman & CEO Gerard Barron noting the submission of the world's first commercial deep-sea mineral recovery permit application under U.S. law, following a Presidential Executive Order, positioning these as crucial steps towards U.S. independence in critical metals like nickel, copper, cobalt, and manganese. Sasol Ltd. also appears overbought with an RSI of 71, its stock having gained around 26% in the past month to close at $4.51 on Wednesday, subsequent to updates provided during its Capital Markets Day. These elevated RSI figures suggest both stocks may be due for a short-term price correction or consolidation.

Key Decisions for Investors

• Investors should be cautious with TMC and SSL due to their high RSI values (TMC at 76.8, SSL at 71), indicating overbought conditions that could lead to short-term price pullbacks or consolidation, particularly for those employing momentum strategies.
• For TMC, weigh the significant long-term potential from its pioneering deep-sea mining permits and alignment with U.S. critical mineral strategy against the immediate overbought technical indicators and recent wider-than-expected quarterly loss.
• Monitor Sasol Ltd. for potential consolidation or a reversal in its recent price trend, as the overbought RSI suggests its 26% gain in the past month may have stretched near-term valuations post-Capital Markets Day updates.