The allure of penny stocks lies in their potential to deliver massive gains in a short period. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment.
Although the potential reward may make it worthwhile, choosing the right penny stock is a daunting task. Nevertheless, we’ll do our best to identify short-term trade opportunities in this exciting space.
With this in mind, we’re starting a new series called “Penny Stock of the Day”. These ideas are geared for traders with a high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Sintx Technologies Inc. (NASDAQ: SINT)
Today’s penny stock pick is the commercial biomaterial company, Sintx Technologies Inc. (NASDAQ: SINT).
SINTX Technologies Inc. focuses on using its silicon nitride technology platform to develop, manufacture and sell a range of medical devices.
The company provides solid and porous silicon nitride; silicon nitrite powder; and silicon nitride coating products. It has a collaboration agreement with Oxford Performance Materials, Inc. to develop a poly-ether-ketone-ketone silicon nitride composite based on OXPEKK SC solution casting technology.
SINT is also engaged in developing wear- and corrosion-resistant implant components for hip and knee arthroplasty and sells spinal fusion and fixation devices and related products used in the treatment of spine disorders.
Website: www.sintx.com
Latest 10-k report: https://sec.report/Document/0001493152-21-006489/
Analyst Consensus: According to TipRanks analytics, Tate Sullivan from Maxim Group has forecast a price target of $4.50 for SINT, which represents a 163% upside from the last price of $1.71.
Potential Catalysts / Reasons for the Hype:
- The company shipping the first order of its new product, FleX SN-PEEK, which will be used in orthopedic implants.
- The company recently selling the first shipment of FleX SN-AP antipathogenic silicon nitride powder to O2TODAY for integration into a proprietary line of masks and filters. SINTX’s FleX SN-AP is said to be capable of rapidly inactivating a wide range of bacteria, molds, and viruses, including SARS-CoV-2, Influenza A, and H1N1.
- SINT being used as one of the five biomaterials were in the study: Comprehensive in vitro comparison of cellular and osteogenic response to alternative biomaterials for spinal implants.
- The company’s inclusion in the Russel Index. The index covers the smallest stocks in the Russell 2000 with market caps between $50 and $300 million.
- SINT inking an asset purchase agreement with B4C, LLC of Dayton, Ohio, to acquire the equipment and technical processes required to make ballistic armor plates.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock has currently broken out of the falling wedge pattern with very high volume. This pattern is marked in purple color lines. A breakout from the falling wedge pattern indicates that the stock may move higher. The stock is also trading above its 50-day SMA, indicating that bulls are slowly gaining control.
SINT – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness because the (+DI) line is greater than the (-DI) line, the ADX and (+DI) lines are above the (-DI) line, and the ADX line is moving up from below the (-DI) and (+DI) lines.
#3 Bullish RSI: The daily chart shows that the RSI is moving higher from oversold levels. It is currently above 50 and moving higher, indicating the strength of the current upmove.
#4 Above Support Area: The weekly chart shows that the stock is currently trading above a long-term support area. This has been marked as a pink color dotted line. This is a possible bullish indication.
SINT – Weekly Chart
#5 Bullish Stoch: The weekly chart shows that the stochastic is moving higher from oversold levels. The %K line is also above the %D line. All these indicate possible bullishness.
#6 Bullish RSI: In the weekly chart, the RSI is currently moving higher from oversold levels, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for SINT is above the 200-day SMA, which translates to a price of $1.80. This is marked as a green color dotted line in the chart.
Target Prices: Our target prices are $3.00 and $5.00.
Stop Loss: To limit risk, place a stop loss at $1.30. Note that the stop loss is on a closing basis.
Our target potential upside is 67% to 178%.
For a risk of $0.50, our first target reward is $1.20, and the second target reward is $3.20. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers 2x to 6x more potential upside than downside.
Potential Risks / Red Flags:
- The company has incurred substantial net losses since its inception. For the years ended December 31, 2020, and 2019, the company had reported a net loss of $7.0 million and $4.8 million, respectively.
SINT – Annual Report
- The company was formerly known as Amedica Corporation and changed its name to Sintx Technologies, Inc. in October 2018, ‘to better reflect its core silicon nitride business.’. Amedica Corp. sold its profitable commercial spine business to CTL Medical Corp., a Dallas-based medical device manufacturer, for up to $10 million, making CTL the owner of Taurus, Preference, and Valeo implants.
- SINT has a significant cash burn. The net cash used in operating activities was $9.1 million in 2020, compared to $6.4 million used in 2019, an increase of $2.7 million.
SINT – Net Cash
- Despite being a loss-making company, the compensation for the company executives increased year over year.
SINT – Executive Compensation
- For the three months ended March 31, 2021, and 2020, the Company incurred a net loss of $2.6 million and generated a net income of $1.2 million, respectively, and used cash in operations of $3.0 million and $3.4 million, respectively. The Company’s accumulated deficit stands at $243.7 million and $241.1 million as of March 31, 2021, and December 31, 2020, respectively.
SINT – Q1 Report
- The company has no patent protection covering the composition of matter for its solid silicon nitride or the process used for manufacturing it. If the company’s competitors create silicon nitride formulations substantially similar to SINT, it could impact the company’s profits.
- On March 24, 2020, SINTX Technologies, Inc. had received a notice from the Nasdaq Listing Qualifications Department of the Nasdaq Stock Market LLC stating that the bid price of the Company’s common stock for the last 30 consecutive trading days had closed below the minimum $1.00 per share required for continued listing under Listing Rule 5550(a)(2).
- There have been significant developments and increasing competition in orthopedic implants. The company has significant competition in the novel bulk biomaterials (eg, polycarbonate urethanes, silicon) or novel formulations of existing but less widely used biomaterials (eg, polyaryletherketones, polyetheretherketone). The company’s FleX SN-PEEK remains to be proven as a superior alternative.
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
— Trades of the Day Research Team