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: Boxed Inc. (NYSE: BOXD)
Today’s penny stock pick is the American online and mobile membership-free wholesale retailer, Boxed Inc. (NYSE: BOXD).
Boxed Inc. operates as an e-commerce retailer and an e-commerce enabler in the continental United States. The company through its e-commerce retail service provides branded and private labelled bulk pantry consumables, such as paper products, snacks, beverages, cleaning supplies, etc. to B2C and B2B customers, vendors, and enterprise retailers, as well as household customers.
It also provides Boxed IQ, a content management suite, programmatic cost-per-click ad-platform, and vendor portal data suite, that offers vendors, suppliers, and CPG manufacturers the ability to advertise their products to customers, and access customer data and feedback in real-time; on-demand grocery services; and an enterprise-level e-commerce platform.
Website: https://www.boxed.com
Latest 10-k report: https://sec.report/Document/0001828672-22-000026
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for BOXD in the last 3 months, the stock has an average price target of $12.00, which is nearly 451% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- BOXD announced that the Company’s stock will be added to the Russell 2000® Index, effective as of market open on June 27, 2022, according to a preliminary list of additions posted by FTSE Russell on June 3, 2022.
- Corporate Insiders Bought Shares Worth $321.2K in the Last 3 Months.
Insiders | Source: TipRanks.com
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.
BOXD – 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 Reversal Pattern: The weekly chart shows that the stock is currently forming a reversal candlestick pattern of bullish engulfing pattern. This is a 2-candle pattern that appears at the end of the downtrend. The first candlestick is bearish. The second candle closes above the high of the first candle. This pattern is marked as an orange color ellipse. This seems like a possible bullish indication.
BOXD – 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.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BOXD is above the price of $2.40.
Target Prices: Our first target is $3.60. If it closes above that level, the second target price is $5.30.
Stop Loss: To limit risk, place a stop loss at $1.70. Note that the stop loss is on a closing basis.
Our target potential upside is 50% to 121%.
For a risk of $0.70, our first target reward is $1.20, and the second target reward is $2.90. 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. BOXD incurred net losses of $69.2 million, $34.4 million, and $65.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, BOXD had an accumulated deficit of $384.6 million.
BOXD – Consolidated Statements of Operations
- On February 8, 2022, a putative stockholder of the Company filed a complaint in the Delaware Chancery Court alleging that he is entitled to attorney’s fees and expenses in connection with a demand he made on the Company regarding the ability of Seven Oaks Class A common stockholders to vote on certain charter amendments in connection with the Business Combination, which closed on December 8, 2021.
- The company currently relies on third-party national, regional, and local logistics providers to deliver the products offered on its website and mobile applications. Packaging and shipping products are critical parts of BOXD’s Retail business and any changes in, or disruptions to, the packaging and shipping vendor arrangements could adversely affect the company’s business, financial condition, and results of operations.
- Seven Oaks management identified two material weaknesses in its internal control over financial reporting, one related to the accounting for a significant and unusual transaction related to the warrants it issued in connection with the IPO in December 2020 and another related to its application of ASC 480-10-S99-3A related to its accounting classification of the initial shares of Seven Oaks Class A common stock outstanding prior to the Business Combination.
- Despite being a loss-making company, the company executives are being paid significant compensation.
BOXD – Executive Compensation
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.
Legendary Stockpicker: "Buy this A.I. stock NOW" [sponsor]His award-winning system pinpointed NVDA and META before both stocks doubled. Now it's flashing "BUY" on this under-the-radar A.I. stock. MORE HERE...