We recently started a series called “Penny Stock of the Day”. These ideas are geared towards 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: Payoneer Global Inc. (NASDAQ: PAYO)
Today’s penny stock pick is the IT service management company, Payoneer Global Inc. (NASDAQ: PAYO).
Payoneer Global Inc. operates a payment and commerce-enabling platform that facilitates marketplaces, platforms and online merchants worldwide. It delivers a suite of services that includes cross-border payments, B2B accounts payable/accounts receivable, multi-currency account, physical and virtual Mastercard cards, working capital, merchant, tax, compliance and risk, and others.
The company’s platform delivers bank-grade security, stability, and redundancy combined with modern digital capabilities that interconnects the world on a single platform. Its cross-border payment solutions support an ecosystem of marketplaces and marketplace sellers to pay their sellers in approximately 190 countries and territories by connecting to Payoneer APIs and for sellers to get paid.
Website: https://www.payoneer.com
Latest 10-k report: https://sec.report/Document/0001558370-22-002812
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for PAYO in the last 3 months, the stock has an average price target of $8.00, which is nearly 79% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Analysts reiterated ‘Buy’ rating and set target prices with double-digit upsides.
Analysts | Source: TipRanks.com
- Rumors that PAYO is about to be acquired.
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.
PAYO – 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 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.
#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.
PAYO – Weekly Chart
#5 Bullish RSI: The RSI is currently moving higher from oversold levels, indicating possible bullishness.
#6 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 PAYO is above the price of $4.90.
Target Prices: Our first target is $6.40. If it closes above that level, the second target price is $7.40.
Stop Loss: To limit risk, place a stop loss at $4.00. Note that the stop loss is on a closing basis.
Our target potential upside is 31% to 51%.
For a risk of $0.90, our first target reward is $1.50, and the second target reward is $2.50. 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. PAYO incurred net losses of $34.0 million, $23.7 million, and $0.6 million in the years ended December 31, 2021, 2020, and 2019, respectively.
PAYO – Consolidated Statements of Loss
- Hedge Funds Decreased Holdings by 1.2M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- On September 28, 2021, the National Banking and Securities Commission (CNBV) and the Bank of Mexico revoked the banking license of a banking entity utilized by the Company due to the banking entity not meeting applicable capital requirements. As a result, the Company is unable to withdraw funds from the banking entity.
- On June 25, 2020, the German holding company of one of the Company’s card issuers in the United Kingdom and processing bank in Germany filed for insolvency protection after accusations of a significant fraud event.
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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