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: Hall of Fame Resort & Entertainment Co (NASDAQ: HOFV)
Today’s penny stock pick is the resort and entertainment company, Hall of Fame Resort & Entertainment Co (NASDAQ: HOFV).
Hall of Fame Resort & Entertainment Co is primarily in the business of services-miscellaneous amusement & recreation and centered around the power of professional football. It owns the premier sports, entertainment, and media enterprise surrounding the Pro Football Hall of Fame in Canton, Ohio.
Website: https://www.hofreco.com
Latest 10-k report: https://sec.report/Document/0001213900-21-014620/
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for HOFV in the last 3 months, the stock has an average price target of $5.00, which is nearly 276% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company reported a good construction update on the Hall of Fame Village.
- Maxim Group gave a “buy” rating on the stock.
Analyst Forecasts | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock currently looks poised for a breakout from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
HOFV – Daily Chart
#2 Bullish RSI: The RSI is currently moving higher from oversold levels, indicating possible bullishness.
#3 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#4 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This is a possible bullish indication.
HOFV – Weekly Chart
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#6 Oversold RSI: In the weekly chart, the RSI is currently near oversold levels and moving higher. 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 HOFV is above the price of $1.86.
Target Prices: Our first target is $2.80. If it closes above that level, the second target price is $4.50.
Stop Loss: To limit risk, place a stop loss at $1.30. Note that the stop loss is on a closing basis.
Our target potential upside is 51% to 142%.
For a risk of $0.56, our first target reward is $0.94, and the second target reward is $2.64. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of increasing net losses.
HOFV – Results of Operations
- Corporate Insiders Sold Shares Worth $432.2K in the Last 3 Months.
Insiders | Source: TipRanks.com
- Hedge Funds Decreased Holdings by 50.0K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The Company’s wholly owned subsidiary, HOF Village Stadium, LLC, was a defendant in a lawsuit “National Football Museum, Inc. dba Pro Football Hall of Fame v. Welty Building Company Ltd., et al;” filed in the Stark County Court of Common Pleas. PFHOF, an affiliate, filed this suit for monetary damages as a result of the cancellation of the 2016 Hall of Fame Game.
- Despite being a loss-making company, the executives are being paid significant compensation.
HOFV – Executive Compensation
- HOFV is an early stage company with a minimal track record and limited historical financial information available.
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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