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Sprouts, Darden Offer High-Upside Setups for Risk-Takers
Written by Sam Quirke. Published 9/26/2025.
Key Points
- Both Sprouts Farmers Market and Darden Restaurants have sold off heavily in recent weeks.
- With the RSI for each stock now at multi-year lows, the setups are compelling for risk-hungry investors.
- Continuing analyst support and double-digit upside targets mean these are falling knives that just might be worth catching.
With the major equity indices near record highs, you'd be forgiven for thinking it's been smooth sailing for investors. But dig deeper—especially in non-tech names—and you'll find many individual stocks under pressure. For contrarian investors with an appetite for risk, that's often where the biggest opportunities lie.
As Wall Street says, trying to "catch a falling knife" can be risky, but if you time it right, the payoff can be huge. Two stocks that now fit that bill are Sprouts Farmers Market Inc. (NASDAQ: SFM) and Darden Restaurants Inc. (NYSE: DRI). Both have seen investors sell aggressively in recent weeks, pushing their relative strength index (RSI) readings to multi-year lows. For contrarian investors, each setup warrants a closer look.
Sprouts Farmers Market: Oversold to Multi-Year Extremes
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Sprouts has plummeted roughly 35% since June, hitting fresh lows in Wednesday's session. Its RSI has dipped below 18—the lowest reading in over five years.
That selloff stands in contrast to Sprouts' solid fundamentals. In its latest quarterly report, revenue and EPS beat consensus, while comparable store sales climbed sharply. The company also unveiled a $1 billion share repurchase program, signaling that management sees value at current levels.
Trading around $115, Sprouts shares sit well below recent analyst upgrades and price targets. When Wells Fargo elevated its rating to Overweight last month, it set a $180 target, while Evercore ISI went further with a $190 target. From Wednesday's close, those forecasts imply more than 50% upside if Sprouts can steady the ship.
Of course, the risk is that the stock continues to slide without finding a base. Yet readings this extreme are rare, and historically, they often mark turning points. Might fortune favor the bold?
Darden Restaurants: Analyst Support Strengthens
Shares of Darden, operator of Olive Garden and other casual-dining chains, have fallen about 20% since June after a lackluster summer. Last week's Q1 earnings report missed headline estimates, sending the stock down another 10% and dragging its RSI to 20—the lowest in more than five years.
However, while investors fret that higher costs could squeeze margins further, many analysts believe the worst is already priced in. Following the report, Deutsche Bank, Morgan Stanley, and Evercore ISI all reiterated buy-equivalent ratings, citing Darden's scale, pricing flexibility, and cost discipline as drivers of future growth.
New price targets reach as high as $240, implying nearly 30% upside from Wednesday's close. And unlike Sprouts' grimmer setup, Darden appears to be consolidating after its recent drop—a configuration that may appeal to those seeking evidence the selling pressure has eased.
The Macro Environment Remains Favorable
At first glance, the charts for both stocks might scream "stay away." But they present the kind of contrarian setups that can reward bold investors. With interest rates easing and major indices near record highs, risk-on sentiment remains strong. Investors are hunting for asymmetric upside, and both Sprouts and Darden fit neatly into that bucket.
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