This High-Risk / High-Reward Stock Just Broke Out On Very High Volume

We recently started a series called “Penny Stock of the Day”. These ideas are geared for traders with an extremely 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: Tiziana Life Sciences PLC (NASDAQ: TLSA)

Today’s penny stock pick is the biotechnology company, Tiziana Life Sciences PLC (NASDAQ: TLSA).

Tiziana Life Sciences Plc focuses on the discovery and development of molecules and related diagnostics to treat diseases in oncology and immunology in the United Kingdom.

Its product pipeline includes Foralumab (TZLS-401), and Milciclib (TZLS-201). The company also develops anti-IL6R (TZLS-501), a human anti-interleukin-6 receptor monoclonal antibody for the treatment of IL6-induced inflammation, primarily to treat COVID-19 patients with severe respiratory symptoms. It has a collaboration agreement with FHI Clinical Inc. to conduct a phase 2 clinical trial for treating hospitalized severe COVID-19 patients with intranasal foralumab, a human anti-CD3 monoclonal antibody.

Website:  www.tizianalifesciences.com

Latest 10-k report (20-F Report):  https://sec.report/Document/0001213900-21-027177/

Analyst Consensus: According to TipRanks Analytics, no analyst has given stock ratings to Tiziana Life Sciences in the past 3 months. However, analysts from B.Riley Financial and H.C. Wainwright had given ‘Buy’ recommendation and price targets of $8.00 and $11.00 respectively for the stock, during the past year.

Recent Analyst Ratings | Source: TipRanks.com

Potential Catalysts / Reasons for the Hype:

  • The news of Precision Bio inking licensing deal with Tiziana Life for foralumab in cancer.
  • Study results from TLSA of intranasally administered foralumab published in the peer-reviewed “Frontiers in Immunology” journal.
  • The news of the company submitting a grant to the United Kingdom COVID Therapeutics Advisory Panel (UK-CTAP) to support further clinical development of nasally administered Foralumab, a fully human anti-CD3 monoclonal antibody, as an innovative ‘Take Home’ approach for treatment of non-hospitalized patients with COVID-19.

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 was forming a falling wedge pattern for the past several weeks. These are marked as pink color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out of the falling wedge pattern with very high volume, indicating possible bullishness. The stock is also trading above its 50-day SMA, indicating that the bulls are currently in control.

TLSA – Daily Chart

#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI and the ADX lines are above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines.

#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.

#4 Bullish Stoch: The chart shows that the %K line of the stochastic is above the %D line, indicating possible bullishness.

#5 Above Support Area: The weekly chart shows that the stock is trading above a support area, which is marked as a blue color dotted line. This is a possible bullish indication.

TLSA – Weekly Chart

#6 Bullish Stoch: In the weekly chart as well, the %K line of the stochastic is above the %D line. It is also moving higher from oversold levels. All these are positive indications.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, the ideal buy level for TLSA is if it closes above the near-term weekly resistance level. This translates to a price of above $2.20.

Target Prices: Our target prices are $3.50 and $4.50.

Stop Loss: To limit risk, place a stop loss at $1.45. Note that the stop loss is on a closing basis.

Our target potential upside is 59% to 105%.

For a risk of $0.75, our first target reward is $1.30, and the second target reward is $2.30. This is a nearly 1:2 and 1:3 risk-reward trade.

In other words, this trade offers 2x to 3x more potential upside than downside.

Potential Risks / Red Flags:

  1. Since its inception in May 2013, the company had incurred significant net losses. TLSA’s net losses were $26.1 million, $9.3 million, and $8.0 million for the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, the company had an accumulated loss of $84.6 million.

    TLSA – Consolidated Statement of Operations and Comprehensive Loss Data

  2. The company executives are being paid significant compensation despite the company reporting losses year-over-year.

    TLSA – Executive Compensation

  3. The company has not yet commercialized its product candidates. In case the company encounters substantial delays in clinical trials of its product candidates, it may be unable to obtain required regulatory approvals, and commercialize its products.
  4. Substantial additional funding is required to complete the development of TLSA’s product candidates, which may not be available on acceptable terms, if at all. Failure to obtain this necessary capital when needed may force the company to delay, limit, or terminate certain of its product development, research operations, or future commercialization efforts, if any.
  5. The bottomline is that the CEO is drawing compensation of $13.5mill a year, there are hardly any institutional owners, the company has no revenue, and has not yet demonstrated its ability to successfully complete Phase 3 or other pivotal clinical trials, obtain regulatory approvals, or commercialize any of its product candidates.

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

READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. 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. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.

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