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: Brainstorm Cell Therapeutics Inc. (NASDAQ: BCLI)
Today’s penny stock pick is the biotechnology company, Brainstorm Cell Therapeutics Inc. (NASDAQ: BCLI).
Brainstorm Cell Therapeutics Inc. engages in the development and commercialization of autologous cellular therapies for the treatment of neurodegenerative diseases.
The company holds rights to develop and commercialize its NurOwn technology that utilizes cell culture methods to induce autologous bone marrow-derived mesenchymal stem cells to secrete high levels of neurotrophic factors, modulate neuroinflammatory and neurodegenerative disease processes, promote neuronal survival, and enhance neurological function.
It is developing NurOwn, which has completed Phase III clinical trial for the treatment of amyotrophic lateral sclerosis; and in Phase II for the treatment of progressive multiple sclerosis and alzheimer’s disease, as well as for other central nervous system disorders. The company has a partnership with Catalent for the manufacture of NurOwn.
Website: www.brainstorm-cell.com
Latest 10-k report: https://sec.report/Document/0001104659-21-011928/
Analyst Consensus: Based on 1 Wall Street analyst offering 12-month price targets for BCLI in the last 3 months, the stock has an average price target of $8.00. This is nearly 109% Upside from the last close.
Source: TipRanks.com
Recent Analyst Ratings | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The news that the results from Phase 3 ALS trial would be published in Peer Reviewed Journal
- BCLI’s corporate update stating that the company is making strong progress towards its goal of advancing NurOwn in ALS and MS.
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, indicating possible bullishness.
BCLI – 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 its 50-day as well as 200-day SMA, indicating that the bulls have currently gained control.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line and moving higher, indicating possible bullishness.
#5 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.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of the prevailing downtrend. The downtrend line has been marked in purple color. This is a possible bullish sign.
BCLI – Weekly Chart
#7 Above Support Area: The stock is currently above a support area, which is marked as an orange color dotted line. This is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BCLI is above the price of $4.02.
Target Prices: Our target prices are $5.50 and $7.00.
Stop Loss: To limit risk, place a stop loss at $3.15. Note that the stop loss is on a closing basis.
Our target potential upside is 37% to 74%.
For a risk of $0.87, our first target reward is $1.48, and the second target reward is $2.98. 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:
- For the year ended December 31, 2020, the company had reported a net loss of $31.8 million.
BCLI – Consolidated Statements of Operations
- The company doesn’t have revenue.
- BCLI had released negative top-line results from a phase 3 clinical trial for its leading candidate treatment. The trial did not reach statistical significance for the primary endpoint.
- The company has low insider ownership. This could translate to lower confidence in the company.
- Despite being a loss-making company with zero revenue, the company executives are being paid significant compensation.
BCLI – Executive Compensation
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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