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: CEL-SCI Corporation (NYSEAMERICAN: CVM)
Today’s penny stock pick is the biotechnology company, CEL-SCI Corporation (NYSEAMERICAN: CVM).
CEL-SCI Corporation engages in the research and development of immunotherapy for the treatment of cancer and infectious diseases. The company’s lead investigational immunotherapy is Multikine, which is under phase III clinical trial for the treatment of head and neck cancer.
Its Ligand Epitope Antigen Presentation System (LEAPS), a pre-clinical patented T-cell modulation process that stimulates the human immune system to fight bacterial, viral, and parasitic infections, as well as autoimmune diseases, allergies, transplantation rejections, and cancer.
The company also develops LEAPS-H1N1-DC; CEL-2000 and CEL-4000 are product candidates for the treatment of rheumatoid arthritis; and LEAPS COV-19, a product candidate to treat COVID-19 coronavirus. CEL-SCI Corporation has a collaboration agreement with the University of Georgia’s Center for Vaccines and Immunology to develop LEAPS COVID-19 immunotherapy.
Website: www.cel-sci.com
Latest 10-k report: https://sec.report/Document/0001654954-21-013417/
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for CVM in the last 3 months, the stock has an average price target of $17.00, which is nearly 363% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The rumors that Geert Kersten, CEO, “tipped off an invitation-only group of investors and brokers” about the company’s plans to issue a “major press release” later this week related to Multikine.
- Potential for FDA approval for Multikine. Multikine® Immunotherapy Produces Significant 14.1% 5-Year Survival Benefit (62.7% Vs 48.6%) in the Group Receiving Surgery Plus Radiotherapy in a Landmark Head and Neck Cancer Phase 3 Study.
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 with historic high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
CVM – 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 RSI: The RSI is moving higher from oversold levels and is currently nearing 50, 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 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.
CVM – Weekly Chart
#6 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.
#7 Oversold RSI: The RSI is currently moving higher from oversold levels, indicating that a bullish reversal may be imminent.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for CVM is above the price of $4.00.
Target Prices: Our first target is $5.50. If it closes above that level, the second target price is $7.50.
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 38% to 88%.
For a risk of $0.80, 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. Since the date of its formation and through September 30, 2021, CEL-SCI incurred net losses of approximately $418 million.
CVM – Statements of Operations
- Despite being a loss-making company, the executives are being paid significant compensation.
CVM – Executive Compensation
- Hedge Funds Decreased Holdings by 33.7K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
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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