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: Vascular Biogenics Ltd (NASDAQ: VBLT)
Today’s penny stock pick is the clinical stage biopharmaceutical company, Vascular Biogenics Ltd (NASDAQ: VBLT).
Vascular Biogenics Ltd develops therapeutics for the treatment of cancer and immune-inflammatory diseases in Israel and the United States. Its programs are based on its vascular targeting system, a gene-based technology targeting newly formed blood vessels; and monocyte targeting technology, an antibody-based technology that enables specifically inhibit monocyte migration for immune-inflammatory applications.
The company’s lead product candidate is VB-111, a gene-based biologic that is in Phase III clinical trials for the recurrent platinum-resistant ovarian cancer; and Phase II clinical trials treatment of recurrent glioblastoma and colorectal cancer, as well as has completed Phase II clinical trial for the treatment of thyroid cancer. It is also developing VB-601 for various inflammatory indications, and VB-611 for various solid tumors.
Latest 10-k report: https://sec.report/Document/0001493152-22-007493/
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for VBLT in the last 3 months, the stock has an average price target of $4.50, which is nearly 185% upside from current levels.
Potential Catalysts / Reasons for the Hype:
- The FDA granted fast track designation to ofranergene obadenovec (ofra-vec or VB-111) in combination with paclitaxel for the treatment of platinum-resistant ovarian cancer.
- The completion of OVAL PHASE III trial enrollment.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
#1 Downtrend Channel: The daily chart shows that the stock is trading within a downtrend channel, which is shown as pink color lines. The stock currently looks poised for a breakout from the trend channel. This is a possible bullish indication.
#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 RSI: The RSI is above 50 and moving higher, indicating possible bullishness.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as an orange color dotted line. This is a possible bullish indication.
#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 VBLT is above the price of $1.70.
Target Prices: Our first target is $2.90. If it closes above that level, the second target price is $4.00.
Stop Loss: To limit risk, place a stop loss at $1.00. Note that the stop loss is on a closing basis.
Our target potential upside is 71% to 135%.
For a risk of $0.70, our first target reward is $1.20, and the second target reward is $2.30. 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 and has not yet generated any regular revenue streams. VBLT incurred losses in each year since its inception in 2000, including net losses of $29.9 million, $24.2 million, and $19.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, the company had an accumulated deficit of $262.1 million.
- The company was formerly known as Medicard Ltd. and changed its name to Vascular Biogenics Ltd. in January 2003.
- Hedge Funds Decreased Holdings by 63.3K Shares Last Quarter.
- Despite being a loss-making company, the aggregate compensation paid to the company’s current directors, executive officers, and key employees, including share-based compensation, for the year ended December 31, 2021, was $3.9 million.
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!
— 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.Retire Early With $3 Wonder Stock? [sponsor]
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