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: Jaguar Health Inc. (NASDAQ: JAGX)
Today’s penny stock pick is the commercial stage pharmaceuticals company, Jaguar Health Inc. (NASDAQ: JAGX).
Jaguar Health Inc. focuses on developing prescription medicines for people and animals with GI distress, specifically chronic, debilitating diarrhea. It operates through two reportable segments, Human Health, and Animal Health.
The company, through its subsidiary, Napo Pharmaceuticals, Inc., focuses on developing and commercializing proprietary plant-based human gastrointestinal pharmaceuticals from plants harvested responsibly from rainforest areas. It markets Mytesi, a crofelemer 125 mg delayed-release tablet for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy.
It develops Mytesi for multiple possible follow-on indications, including diarrhea related to targeted cancer therapy; orphan-drug indications for infants and children with congenital diarrheal disorders and short bowel syndrome; supportive care for inflammatory bowel disease; irritable bowel syndrome; and for idiopathic/functional diarrhea, as well as a second-generation proprietary anti-secretory agent is in development for cholera. The company also develops Crofelemer, a drug product candidate for chemotherapy-induced diarrhea in dogs.
Website: www.jaguar.health
Latest 10-k report: https://sec.report/Document/0001558370-21-003811/
Analyst Consensus: According to TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for JAGX in the last 3 months, the stock has a ‘Moderate Buy’ rating and a price target of $5.00, which is a 101.61% upside from current levels.
Source: TipRanks.com
Recent Analyst Ratings | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Italian government granting Jaguar Health’s Italian subsidiary Napo EU and Dragon SPAC clearance to proceed with the merger.
- The company reporting updates about ongoing research and development related to the crofelemer drug product candidates.
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 purple 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 high volume, indicating possible bullishness.
JAGX – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and ADX line are above the -DI line, and the ADX line is currently higher than 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 RSI: In the daily chart the RSI is above 50 and moving higher, 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 pink color dotted line. This is a possible bullish indication.
JAGX – Weekly Chart
#6 Oversold RSI: In the weekly chart, the RSI is currently moving higher after reaching oversold levels, 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 JAGX is above the price of $2.70.
Target Prices: Our target prices are $4.00 and $5.50.
Stop Loss: To limit risk, place a stop loss at $1.90. Note that the stop loss is on a closing basis.
Our target potential upside is 48% to 104%.
For a risk of $0.80, our first target reward is $1.30, and the second target reward is $2.80. 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 been a loss-making company. JAGX’s net loss and comprehensive loss for the years ended December 31, 2020, and 2019 were $33.8 million and $38.5 million, respectively.
JGX – Consolidated Statements of Operations
- The company has done four reverse splits so far. There are now rumors about yet another reverse split.
- On August 17, 2020, the Company had received a letter from the Staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC notifying the Company that it no longer complies with Nasdaq Listing Rule 5550(b)(1) due to the Company’s failure to maintain a minimum of $2.5 million in stockholders’ equity.
- Despite being a loss-making company, the executives are being paid significant compensation.
JAGX – Executive Compensation
- On July 20, 2017, a putative class action complaint was filed against the company, which has had to be settled for $2.6 million.
- On May 4, 2020, Jaguar Health, Inc. received a letter from the Committee on Oversight and Reform of the U.S. House of Representatives regarding the list price adjustment of Mytesi.
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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