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: Innoviz Technologies Ltd (NASDAQ: INVZ)
Today’s penny stock pick is the LiDAR sensors manufacturing company, Innoviz Technologies Ltd (NASDAQ: INVZ).
Innoviz Technologies Ltd designs and manufactures solid-state LiDAR sensors and develops perception software that enables the mass production of autonomous vehicles.
The company manufactures InnovizOne, a solid-state LiDAR sensor designed for automakers and robotaxi, shuttle, trucking, and delivery companies requiring an automotive-grade and mass-producible solution to achieve autonomy. Its automotive-grade sensor is integrable into Level 3 through 5 autonomous vehicles for the safety of passengers and pedestrians.
The company also provides InnovizTwo, an automotive-grade LiDAR sensor that offers a solution for all levels of autonomous driving, as well as an option to integrate the perception application in the LiDAR sensor; Innoviz360, a 360-degree LiDAR for automotive and non-automotive applications; and perception application, a software application that turns the InnovizOne LiDAR’s raw point cloud data into perception outputs to provide scene perception and deliver an automotive-grade ASIL B(D) solution.
Website: https://innoviz.tech
Latest 10-k report: https://sec.report/Document/0001178913-22-001300/
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for INVZ in the last 3 months, the stock has an average price target of $8.00, which is nearly 98% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Hedge Funds Increased Holdings by 259.7K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- LiDAR system supplier LiangDao Intelligence and Innoviz Technologies signed a strategic partnership. The partnership will focus on deep collaboration and exploration of the customization of Innoviz’s LiDAR solutions for OEMs in the Chinese region, the development of perception solutions, and validation and data collection to accelerate the introduction of series production solutions of high-resolution LiDAR for the Chinese market, based on InnovizTwo.
- InnovizOne was selected by BMW for use in production cars.
- Rumors of partnership with Volkswagen.
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.
INVZ – 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 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a downtrend which is marked as an orange color line. This is a possible bullish indication.
INVZ – Weekly Chart
#7 Bullish RSI: The RSI is nearing 50 and moving higher, indicating possible bullishness.
#8 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 INVZ is above the price of $4.30.
Target Prices: Our first target is $5.70. If it closes above that level, the second target price is $6.50.
Stop Loss: To limit risk, place a stop loss at $3.55. Note that the stop loss is on a closing basis.
Our target potential upside is 33% to 51%.
For a risk of $0.75, our first target reward is $1.40, and the second target reward is $2.20. 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.
INVZ – Consolidated Statements of Operations
- Despite being a loss-making company, the aggregate compensation, including share-based compensation, paid to its executive officers and directors as a group, for the year ended December 31, 2021, was approximately $6.8 million.
- The company’s limited operating history and evolving business model make evaluating its business and future prospects difficult and may increase the risk of investment.
- INVZ substantially dependent on the BMW L3 Program. Termination of the program could materially and adversely affect the company’s business.
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.