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: Vaccinex Inc. (NASDAQ: VCNX)
Today’s penny stock pick is the biotechnology company, Vaccinex Inc. (NASDAQ: VCNX).
Vaccinex Inc. engages in the discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs. The company offers its products for the treatment of cancer, neurodegenerative diseases, and autoimmune disorders. Its lead product candidate is pepinemab, a humanized monoclonal antibody that is in Phase 1 and 2 clinical trials for the treatment of non-small cell lung cancer (NSCLC), head and neck squamous cell carcinoma (HNSCC), Huntington’s disease, Alzheimer’s disease, osteosarcoma, and melanoma. The company is also developing VX5, a human antibody to CXCL13 that is in preclinical development for the treatment of MS and for other autoimmune disorders; and VX25, a bi-specific molecule based on natural killer T (NKT) vaccine platform for the therapeutic application of NKT cell stimulation for cancer immunotherapy.
Website: www.vaccinex.com
Latest 10-k report: https://sec.report/Document/0001564590-21-016874/
Analyst Consensus: Not Covered By Analysts
Potential Catalysts / Reasons for the Hype:
- Corporate Insiders Bought Shares Worth $6.1M in the Last 3 Months.
VCNX – Insiders | Source: TipRanks.com
- Rumors of a deal with Merck. The company had recently reported positive interim response data in the Phase Ib segment of the KEYNOTE-B84 study of Vaccinex’s pepinemab in combination with Merck’s (known as MSD outside of the United States and Canada) anti-PD-1 therapy KEYTRUDA (pembrolizumab) in patients with recurrent or metastatic head and neck squamous cell carcinoma (R/M HNSCC).
- Positive response to Vaccinex announcing $6.6 million private placement.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel Breakout: The daily chart shows that the stock has broken out of a downtrend channel, which is shown as purple color lines. This is a possible bullish indication.
VCNX – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and the ADX line are above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines.
#3 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#4 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.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 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.
VCNX – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color). 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 VCNX is above the price of $2.12.
Target Prices: Our first target is $3.30. If it closes above that level, the second target price is $5.00.
Stop Loss: To limit risk, place a stop loss at $1.40. Note that the stop loss is on a closing basis.
Our target potential upside is 56% to 136%.
For a risk of $0.72, our first target reward is $1.18, and the second target reward is $2.88. 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. For the years ended December 31, 2020, and 2019, VCNX reported a net loss of $28.9 million, $31.9 million, respectively. As of December 31, 2020, and 2019, the company had an accumulated deficit of $277.5 million, and $248.6 million, respectively.
VCNX – Net Loss
- The company’s candidate is currently only in p 1/2 trials, which means that it is still years away from approval.
- Despite being a loss-making company, the company executives are being paid significant compensation.
VCNX – 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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