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: Coeur Mining Inc. (NYSE: CDE)
Today’s penny stock pick is the precious metals mining company, Coeur Mining Inc. (NYSE: CDE).
Coeur Mining Inc. explores for precious metals in the United States, Canada, and Mexico. The company primarily explores for gold, silver, zinc, and lead properties.
It holds 100% interests in the Palmarejo gold and silver mine covering an area of approximately 67,296 net acres located in the State of Chihuahua in Northern Mexico; the Rochester silver and gold mine that covers an area of approximately 43,441 net acres situated in northwestern Nevada; the Kensington gold mine comprising 3,972 net acres located to the north of Juneau, Alaska; the Wharf gold mine covering an area of approximately 3,243 net acres situated in the northern Black Hills of western South Dakota; and the Silvertip silver-zinc-lead mine comprising 97,298 net acres located in northern British Columbia, Canada.
In addition, the company owns interests in the Crown and Sterling projects located in southern Nevada; and the La Preciosa project located in Mexico. Further, it markets and sells its concentrates to third-party customers, smelters, under off-take agreements.
Website: www.coeur.com
Latest 10-k report: https://sec.report/Document/0000215466-22-000019/
Analyst Consensus: As per TipRanks Analytics, based on 5 Wall Street analysts offering 12-month price targets for CDE in the last 3 months, the stock has an average price target of $4.95, which is nearly 4% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The increasing price of gold and silver.
- Corporate Insiders Bought Shares Worth $118.8K 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 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. Once the stock breaks out of the falling wedge pattern, it could move higher.
CDE – 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 is currently moving higher from below the +DI and -DI lines.
#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 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels before surging back again. The weekly chart shows that the stock had taken support at the 23.6% Fibonacci support level of the upmove before starting to move higher. This is a possible bullish sign.
CDE – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#7 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 CDE is above the price of $5.50.
Target Prices: Our first target is $7.00. If it closes above that level, the second target price is $9.00.
Stop Loss: To limit risk, place a stop loss at $4.50. Note that the stop loss is on a closing basis.
Our target potential upside is 27% to 64%.
For a risk of $1.00, our first target reward is $1.50, and the second target reward is $3.50. 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.
CDE – Consolidated Statements of Comprehensive Income
- Hedge Funds Decreased Holdings by 234.6K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company was formerly known as Coeur d’Alene Mines Corporation and changed its name to Coeur Mining, Inc. in May 2013.
- As of December 31, 2021, and December 31, 2020, the Company had surety bonds totaling $315.1 million and $311.9 million, respectively, in place as financial support for future reclamation and closure costs.
- Despite being a company with a history of net losses, the executives are being paid millions in compensation.
CDE – 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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