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: Remark Holdings Inc. (NASDAQ: MARK)
Today’s penny stock pick is the artificial-intelligence-based solutions company, Remark Holdings Inc. (NASDAQ: MARK).
Remark Holdings Inc. delivers an integrated suite of AI solutions that enable businesses and organizations to solve problems, reduce risk and deliver positive outcomes. The company owns and operates an e-commerce digital media property focuses on a luxury beach lifestyle. The company sells its AI-based products and services under the Remark AI brand in the United States; and under the KanKan brand in China.
Website: www.remarkholdings.com
Latest 10-k report: https://sec.report/Document/0001368365-21-000017/
Analyst Consensus: Not covered by analysts
Potential Catalysts / Reasons for the Hype:
- Launch of its updated AI platform for Campus Management to meet the tech needs of its customers in China
- News that the company filed a registration statement for a potential offering of securities, including common stock, with an aggregate initial price of up to $50 million.
- Reports about a big deal with MARK to develop trump network, rumored to be a 5 year contract.
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 historic high volume, indicating possible bullishness.
MARK – 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 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 Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 0. This indicates bullishness.
#5 Double Bottom Pattern Breakout: The daily chart shows that the stock had broken out of a double bottom pattern, which is marked in purple color. This is a possible bullish sign.
#6 Above Support Area: The weekly chart shows that the stock is trading above a strong support area, which is marked as an orange color dotted line. This is a possible bullish indication.
MARK – Weekly Chart
#7 Bullish Stoch: In the weekly chart, the %K line of the stochastic is above the %D line and is currently moving up from oversold levels. This indicates 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 MARK is above the price of around $2.30.
Target Prices: Our target prices are $3.50 and $5.00.
Stop Loss: To limit risk, place a stop loss at $1.55. Note that the stop loss is on a closing basis.
Our target potential upside is 52% to 117%.
For a risk of $0.75, our first target reward is $1.20, and the second target reward is $2.70. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. During the year ended December 31, 2020, and in each fiscal year since its inception, the company had incurred net losses and generated negative cash flow from operations, resulting in an accumulated deficit of $360.5 million.
MARK – Consolidated Statements of Operations and Comprehensive Loss
- The company executives are being paid good compensation despite reporting losses year over year.
MARK – Executive Compensation
- In September 2019, the company had received a notice from the Listing Qualifications department of The Nasdaq Stock Market LLC regarding the company’s failure to satisfy certain listing requirements.
- In July 2020, Levi & Korsinsky announced it has commenced an investigation of Remark Holdings, Inc. concerning possible breaches of fiduciary duty.
- J Capital Research had released a report on February 6, 2018 stating that it had investigated Remark Holdings’ business in China and reported, “Wherever we look, we cannot find a real business behind Remark Holdings.” J Capital says that they spoke with “some of the biggest private lenders” in China, who had “never heard of the KanKan credit platform.” SeekingAlpha had reported that, Remark doesn’t even own the technology underlying KanKan (i.e., they have no patents for the technology).
- Girard Gibbs’ financial fraud and securities lawyers had commenced an investigation whether Remark Holdings had violated federal securities law by failing to disclose vital information about its business dealings (or lack thereof) in China
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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