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: LiveVox Holdings Inc. (NASDAQ: LVOX)
Today’s penny stock pick is the cloud-based digital engagement tools and customer services company, LiveVox Holdings Inc. (NASDAQ: LVOX).
LiveVox Holdings Inc. (NASDAQ: LVOX) products include Four Clouds, an outbound voice solution that enables to manage regulatory requirements with the option of three manual and one automated outbound dialing system; Bundles, including two-way messaging, outbound campaigns and compliance, speech analytics, inbound contact center, and cloud interactive voice response solutions; inbound voice solutions, which comprise automatic call distributor, IVR, and wallboards; and blended omnichannel solutions, such as voice, email, SMS, virtual agents, and webchat. The company also offers CRM that integrates to other data sources for knowledge on-hand for focusing on experience consistency; Workforce Optimization, an easy-to-use and easy-to-activate tools to help expand productivity and compliance in contact center from any starting point; SpeechIQ allows to approach quality assurance in a very targeted fashion and on a broad scale; and PBX Solution, a connectivity solution, including cloud-based VoIP phone service, SD-WAN, wireless backup, and internet service provider management that eliminates connection issues while reducing expenses. It serves financial services, teleservices, healthcare, telecom, customer care, BPO, and collection industries.
The company had completed a business combination with Crescent Acquisition Corp, a publicly traded special purpose acquisition company, on June 18, 2021, to become publicly traded.
Website: https://livevox.com/
Latest 10-k report: https://sec.report/Document/0001564590-21-010384/
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for LVOX in the last 3 months, the stock has an average price target of $8.67, which is nearly 74% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Hedge Funds Increased Holdings by 12.6K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Corporate Insiders Bought Shares Worth $1.9M in the Last 3 Months.
Insiders | Source: TipRanks.com
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 months. 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 from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
LVOX – Daily Chart
#2 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#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 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 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend and is moving higher. This is a possible bullish indication.
LVOX – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 MACD above Signal Line: In the weekly chart, 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 LVOX is above the price of $5.35.
Target Prices: Our first target is $6.20. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $4.90. Note that the stop loss is on a closing basis.
Our target potential upside is 16% to 31%.
For a risk of $0.45, our first target reward is $0.85, and the second target reward is $1.65. 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.
LVOX – Consolidated Statements of Operations
- Despite reporting millions in losses during the latest year, the company executives are being paid significant compensation.
LVOX – Executive Compensation
- The company has no operating history and no revenues, making it impossible to have a basis on which to evaluate LVOX’s ability to achieve its business objective.
- As of December 31, 2020, the Company had current liabilities of $356,979 and working capital of $(2,255,057). An independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about the company’s ability to continue as a “going concern.”
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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