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: Taseko Mines Ltd (NYSE: TGB)
Today’s penny stock pick is the Canadian copper mining company, Taseko Mines Ltd (NYSE: TGB).
Taseko Mines Ltd acquires, develops, and operates mineral properties. The company explores for copper, molybdenum, gold, niobium, and silver deposits. It holds 75% interest in the Gibraltar mine located in British Columbia. The company also holds 100% interest in Yellowhead copper project, the Aley niobium project, the Harmony Gold Project, and the New Prosperity gold and copper project located in British Columbia; and the Florence copper project located in Arizona.
Website: www.tasekomines.com
Latest 10-k report: https://sec.report/Document/0001062993-21-003110/
Analyst Consensus: As per TipRanks analytics, based on three Wall Street analysts offering 12-month price targets in the last 3 months, TGB’s average price target is $2.38, representing a 21.43% change from the last price.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company receiving draft Underground Injection Control (UIC) permit from the Environmental Protection Agency (EPA), the final regulatory milestone required of Florence Copper to operate its Production Test Facility (PTF) in Florence, Arizona using in-situ copper recovery (ISCR) technology.
- TGB signing a US$50 million Revolving Credit Facility, which will be available for working capital and general corporate purposes.
- The company getting buy rating reiterated by BMO capital.
Recent Analyst Ratings | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as purple color lines. Once a stock breaks out from a symmetrical triangle pattern, it usually moves higher.
TGB – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is above the -DI line, and the ADX line has started to move higher from below the +DI and -DI lines.
#3 Price above MAs: The stock is currently above the 50-day as well as 200-day SMA, indicating that the bulls are currently in 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 above 50 and moving higher, indicating the strength of the current upmove.
#6 Flag Pattern Breakout: The weekly chart shows that the stock has currently broken out of a flag pattern, which is marked in pink color. This is a possible bullish sign.
TGB – Weekly Chart
#7 Bullish Stoch: In the weekly chart, the %K line is above the %D line of the stochastic, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for TGB is above yesterday’s close, which translates to a price of $2.05.
Target Prices: Our target prices are $2.50 and $3.00.
Stop Loss: To limit risk, place a stop loss below $1.77. Note that the stop loss is on a closing basis.
Our target potential upside is 23% to 46%.
For a risk of $0.28, our first target reward is $0.45, and the second target reward is $0.95. 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:
- The company is a loss-making company. The company had reported a net loss of $23.5 million for the Year Ended December 31, 2020.
TGB – Consolidated Statements of Comprehensive Loss
- Despite reporting losses, the company executives are being given significant compensation. For the year 2020, the compensation amounted to $71 million for just wages, salaries, and benefits, as per the latest annual report.
TGB – Compensation
- The company had lost an appeal for the New Prosperity project, one of the largest undeveloped copper deposits in Canada.
- Raging River Capital LP had commenced a lawsuit in the Supreme Court of British Columbia for a finding that the affairs of Taseko Mines Limited in connection with the acquisition of Curis Resources Ltd. were conducted in a manner that unfairly harmed shareholders.
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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