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: PAVmed Inc. (NASDAQ: PAVM)
Today’s penny stock pick is the surgical and medical instruments and apparatus company, PAVmed Inc. (NASDAQ: PAVM).
PAVmed Inc. operates as a medical device company in the United States. The company’s lead products include CarpX, a percutaneous device to treat carpal tunnel syndrome; and EsoCheck, an esophageal cell collection device for the early detection of adenocarcinoma of the esophagus and Barrett’s Esophagus (BE); and EsoGuard, a bisulfite-converted next-generation sequencing DNA assay.
Its product pipeline also comprises EsoCure, an esophageal ablation device to treat dysplastic BE; PortIO, an implantable intraosseous vascular access device; NextFlo, a disposable infusion platform technology; Veris cancer healthcare platform and implantable intelligent vascular port combining remote monitoring and data analytics; NextVent single-use ventilators; FlexMO medical circulatory support cannulas; Veris cardiac monitors; DisappEAR resorbable pediatric ear tubes; Solys noninvasive glucose monitoring.
Website: www.pavmed.com
Latest 10-k report: https://sec.report/Document/0001493152-22-009202
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for PAVM in the last 3 months, the stock has an average price target of $4.00, which is nearly 215% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Hedge Funds Increased Holdings by 41.5K Shares Last Quarter.
Hedge Fund | Source: TipRanks.com
- Lucid’s addressable market and the rapid build-up of its commercial infrastructure. Lucid is a PAVM subsidiary and commercializing EsoCheck/EsoGuard, devices for detecting pre-esophageal cancer.
- Upcoming subsidiaries -. CarpX and NextFlo. Upcoming commercialization of EsoCure, CarpX, NextFlo, PortIO, and other innovations.
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.
PAVM – 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 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.
PAVM – 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 PAVM is above the price of $1.40.
Target Prices: Our first target is $2.40. If it closes above that level, the second target price is $3.60.
Stop Loss: To limit risk, place a stop loss at $0.80. Note that the stop loss is on a closing basis.
Our target potential upside is 71% to 157%.
For a risk of $0.60, our first target reward is $1.00, and the second target reward is $2.20. 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.
PAVM – Consolidated Statements of Operations
- The company has ongoing legal proceedings.
- On February 7, 2022, Benchmark Investments LLC, which claimed to be affiliated with Benchmark Investments, Inc., filed a complaint in the Supreme Court of the State of New York, New York County, asserting claims alleging the registered direct offerings of shares of common stock of the Company completed in December 2020 were in violation of provisions set forth in an engagement letter between the Company and the Kingswood Capital Markets, and adding to its allegations that financings conducted by the Company in January 2021 and February 2021 also violated the Company’s engagement letter with Kingswood Capital Markets.
- On November 2, 2020, a stockholder of the Company, on behalf of himself and other similarly situated stockholders, filed a complaint in the Delaware Court of Chancery alleging broker non-votes were not properly counted in accordance with the Company’s bylaws at the Company’s Annual Meeting of Stockholders on July 24, 2020, and, as a result, asserted certain matters deemed to have been approved were not so approved.
- Despite being a loss-making company, the executives are being paid significant compensation.
PAVM – Executive Compensation
- The company had filed a shelf-registration statement with the Securities and Exchange Commission intending to raise financing through the issuance of new equity, debt, or a combination of the two. This causes significant shareholder dilution.
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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