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: Vuzix Corp (NASDAQ: VUZI)
Today’s penny stock pick is the American multinational technology firm, Vuzix Corp (NASDAQ: VUZI).
Vuzix Corp, together with its subsidiaries, designs, manufactures, markets, and sells augmented reality (AR) wearable display and computing devices for consumer and enterprise markets in North America, the Asia-Pacific, Europe, and internationally.
It provides M300XL, M400, and M4000 series of smart glasses for enterprise, industrial, commercial, and medical markets; Vuzix Blade smart glasses; waveguide optics and related coupling optics; and Vuzix Shield smart glasses, as well as custom and engineering solutions. The company sells its products through resellers, direct to commercial customers, and via online stores, as well as various Vuzix operated web stores in Europe and Japan.
Website: www.vuzix.com
Latest 10-k report: https://sec.report/Document/0001558370-22-002641
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for VUZI in the last 3 months, the stock has an average price target of $11.50, which is nearly 140% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company announced that it will be showing off some of its new augmented-reality technology at the Field Service Palm Springs 2022 conference. The event is attended by large companies targeting customer care and service solutions.
- Corporate Insiders Bought Shares Worth $50.1K in the Last 3 Months.
Insiders | Source: TipRanks.com
- Vuzix approved an up to $25 million share repurchase plan through March 2023, indicating confidence from the board of directors in the company’s long-term potential.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern: 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 currently looks poised for a breakout from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
VUZI – Daily Chart
#2 Bullish RSI: The RSI is moving higher from oversold levels, indicating possible bullishness.
#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 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.
VUZI – Weekly Chart
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#6 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 VUZI is above the price of $5.50.
Target Prices: Our first target is $8.00. If it closes above that level, the second target price is $11.00.
Stop Loss: To limit risk, place a stop loss at $4.00. Note that the stop loss is on a closing basis.
Our target potential upside is 46% to 100%.
For a risk of $1.50, our first target reward is $2.50, and the second target reward is $5.50. 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. The company reported a net loss of $40,377,160 for the year ended December 31, 2021, a net loss of $17,952,172 for the year ended December 31, 2020, and a net loss of $26,476,370 for the year ended December 31, 2019. VUZI has an accumulated deficit of $203,072,143 as of December 31, 2021.
VUZI – Consolidated Statements of Operations
- The company was formerly known as Icuiti Corporation and changed its name to Vuzix Corporation in September 2007.
- Hedge Funds Decreased Holdings by 143.1K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Despite being a loss-making company, the executives are being paid significant compensation.
VUZI – Executive Compensation
- The company posted net losses during the latest quarter as well.
VUZI – Latest 10Q Report – Consolidated Statements of Operations
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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