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: Pluristem Therapeutics Inc. (NASDAQ: PSTI)
Today’s penny stock pick is the bio-technology company. Pluristem Therapeutics Inc. (NASDAQ: PSTI).
Pluristem Therapeutics Inc. focuses on the research, development, clinical trial, and manufacture of cell therapeutic products and related technologies for the treatment of various ischemic, inflammatory, and hematologic conditions, as well as autoimmune disorders.
The company develops placental expanded (PLX) based cell therapy products, including PLX-PAD that is in Phase III clinical trial for the recovery after surgery for hip fracture; in Phase II clinical trial for the treatment of acute respiratory distress syndrome associated with COVID-19; and in Phase I/II clinical trial for the treatment of steroid-refractory graft versus host disease. It also develops PLX-R18, which has completed Phase I clinical trial incomplete hematopoietic recovery following hematopoietic cell transplantation, as well as conducts various animal studies for the evaluation of PLX-R18 for the treatment of acute radiation syndrome.
The company has a license agreement for conducting clinical trials of PLX-PAD product in South Korea. It also has a collaborative project nTRACK, that examines gold nano particles labeling of stem cells; and has a collaboration agreement with the NASA’s Ames Research Center to evaluate the potential of PLX cell therapies in preventing and treating medical conditions caused during space missions.
Website: www.pluristem.com
Latest 10-k report: https://sec.report/Document/0001213900-21-047664
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for PSTI in the last 3 months, the stock has an average price target of $9.00, which is nearly 392% upside from current levels.
Source: TipRanks.com
Analyst Forecasts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Pluristem Therapeutics and Tnuva Group, Israel’s largest food producer, announced the launch of an innovative collaboration to develop, manufacture and commercialize cultured cell-based products for the food industry. The collaboration will form an entity known as NewCo, which Tnuva will invest $7.5 million in initially.
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 has been 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 from the falling wedge pattern with very high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
PSTI – Daily Chart
#2 Bullish MACD: The MACD line is above the MACD signal line, indicating bullishness.
#3 Bullish RSI: The RSI is moving higher from oversold levels and is currently near 50, indicating possible bullishness.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#5 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend. The downtrend line is marked as a pink color line. This is a possible bullish indication.
PSTI – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, and is also moving higher from oversold levels, indicating possible bullishness.
#7 Bullish RSI: The RSI is currently moving higher from oversold levels, indicating that a reversal may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PSTI is above the price of $2.00.
Target Prices: Our first target is $2.90. If it closes above that level, the second target price is $3.80.
Stop Loss: To limit risk, place a stop loss below $1.40. Note that the stop loss is on a closing basis.
Our target potential upside is 45% to 90%.
For a risk of $0.60, our first target reward is $0.90, and the second target reward is $1.80. 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 has a history of net losses.
PSTI – Consolidated Statements of Operations
- Hedge Funds Decreased Holdings by 425.6K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- According to an article, Pluristem has a long history of ethically questionable reporting to investors, and the company’s top executives have zero educational and professional experience in the biotech field.
- The company’s top-line data from two phase II dose escalation studies evaluating the safety and efficacy of its intramuscular injections of PLX-PAD cells in comparison with placebo for the treatment of acute respiratory distress syndrome (ARDS) associated with COVID-19 did not meet the primary endpoint of statistically significant improvement of ventilator free days (VFD) at 28 days.
- Despite being a loss-making company, the executives are being paid huge compensation – amounting to nearly $20 million for 2021.
PSTI – Executive Compensation
- The company has had zero products and sales during the past twenty years.
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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