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: Corvus Gold Inc. (NASDAQ: KOR)
Today’s penny stock pick is the Canadian mineral exploration company, Corvus Gold Inc. (NASDAQ: KOR).
Corvus Gold Inc. acquires, explores for, and develops mineral properties primarily in Canada and the United States.
Its principal mineral property includes the North Bullfrog project, a gold and silver mining project that consists of patented and unpatented mining claims covering an area of approximately 12,895 hectares located in northwestern Nye County, Nevada; and the Mother Lode project that consists of unpatented lode mining claims covering an area of 3,803 hectares located in northwestern Nye County, Nevada.
Website: www.corvusgold.com
Latest 10-k report: https://sec.report/Document/0001171843-21-005683/
Analyst Consensus: Based on 2 Wall Street analysts offering 12-month price targets for KOR in the last 3 months, the stock has an average price target of $4.39 and an average rating of ‘Moderate Buy’. The average price target is a 38.05% upside from the last close.
Source: TipRanks.com
Recent Analyst Ratings | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- News that South African miner AngloGold Ashanti ANGJ.J agreed to buy out Corvus Gold for 4.10 Canadian dollars per share in a deal valuing the exploration firm at 570 million Canadian dollars ($450 million).
- Corvus Gold returning 185m @ 0.82 g/t Gold incl. 14.6m @ 3.4 g/t Gold from the Lynnda Strip and 14.5m @ 6.48 g/t Gold & 25.9 g/t Silver from Mother Lode in the Eastern Bullfrog Gold District, Nevada.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Formation of Consolidation Area: The daily chart shows that the stock is currently forming a consolidation area, which is shown as a green color rectangle. Once the stock breaks out from this consolidation area, it can move higher.
KOR – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is currently above the -DI line, and the ADX line has currently started to move higher from below the +DI and -DI lines.
#3 Price above MAs: The stock is currently above both 50-day as well as 200-day SMA, indicating that the bulls have currently gained control.
#4 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.
#5 Bullish RSI: The RSI is currently above 50, indicating the strength of the current upmove.
#6 Ascending Triangle Pattern: The weekly chart shows that the stock is currently forming an ascending triangle pattern, which is marked as pink color lines. An Ascending Triangle pattern is a bullish pattern. A breakout from an ascending triangle pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
KOR – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 Bullish MACD: The weekly chart also shows that the MACD line (blue color) is currently above the MACD signal line (orange color). This is a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for KOR is above the price of $3.40.
Target Prices: Our first target is $4.00. If it closes above that level, the second target price is $5.00.
Stop Loss: To limit risk, place a stop loss at $3.05. Note that the stop loss is on a closing basis.
Our target potential upside is 18% to 47%.
For a risk of $0.35, our first target reward is $0.60, and the second target reward is $1.60. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Potential Risks / Red Flags:
- The company has been a loss-making company. For the year ended May 31, 2021, the Company had a net loss of $23,120,477 compared to a net loss of $16,206,652 in the prior year.
KOR – Consolidated Statements of Operations and Comprehensive Losses
- Halper Sadeh LLP, a global investor rights law firm, is investigating whether the sale of Corvus Gold Inc. to AngloGold Ashanti Limited is fair to Corvus Gold shareholders.
- Despite reporting losses year-over-year, the company executives are being given significant compensation.
KOR – Executive Compensation
- On October 10, 2019, the Company announced the completion of a $23,000,000 public bought deal financing. From that, the company has used a whopping $6.6 million in Corporate general and administration, land, and permits.
KOR – Public Bought Deal Financing – Net Use of Proceeds
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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