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: Advent Technologies Holdings Inc. (NASDAQ: ADN)
Today’s penny stock pick is the renewable energy company, Advent Technologies Holdings Inc. (NASDAQ: ADN).
Advent Technologies Holdings Inc. operates in the fuel cell and hydrogen technology markets. It develops, manufactures, and assembles the fuel cell systems and critical components that determine the performance of hydrogen fuel cells and other energy systems. The company offers high-temperature proton exchange membrane (HT-PEM) fuel cells, HT-PEM based membrane electrode assemblies, membranes, and electrodes. It serves stationary and portable power, automotive, aviation, energy storage, and sensor markets.
Website: https://www.advent.energy/
Latest 10-k report: https://sec.report/Document/0001140361-22-012369
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for ADN in the last 3 months, the stock has an average price target of $11.20, which is nearly 209% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company signed a “technology assessment, sales, and development agreement” with Hyundai. This deal gives the company a high-profile partner with which to test out its potentially ground-breaking Membrane Electrode Assemblies (MEAs) and related technologies.
- The company had recently received approval for The White Dragon and Green HiPo projects – two Greek Important Projects of Common European Interest.
- Rumors of upcoming future partnerships with other mega companies.
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.
ADN- 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 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#5 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.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a blue color dotted line. This is a possible bullish indication.
ADN – 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 Bullish RSI: The RSI is currently moving higher from oversold levels, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ADN is above the price of $3.75.
Target Prices: Our first target is $4.70. If it closes above that level, the second target price is $6.40.
Stop Loss: To limit risk, place a stop loss at $3.20. Note that the stop loss is on a closing basis.
Our target potential upside is 25% to 71%.
For a risk of $0.55, our first target reward is $0.95, and the second target reward is $2.65. 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 net losses.
ADN – Results of Operations
- On December 17, 2020, a purported shareholder class action complaint was filed by Dillon Frey against the Company in the Supreme Court of the State of New York, County of New York, alleging that the proposed Business Combination with Advent is both procedurally and substantively unfair and seeking to maintain the action as a class action and enjoin the Business Combination, among other things, without stating a specific amount of damages.
- Despite being a loss-making company, the executives are being paid significant compensation.
ADN – Executive Compensation
- As of December 31, 2021, ADN had Warrants to purchase an aggregate of 26,369,557 shares of its common stock outstanding. The exercise of Warrants for AND’s common stock would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders.
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.