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: NuCana PLC (NASDAQ: NCNA)
Today’s penny stock pick is the clinical-stage biopharmaceutical company, NuCana PLC (NASDAQ: NCNA).
NuCana PLC engages in the development of products for the treatment of cancer. The company develops its products based on its proprietary ProTide technology. Its lead product candidate includes Acelarin, which is in Phase I clinical trial for patients with advanced solid tumors; Phase Ib for patients with recurrent ovarian cancer; Phase Ib clinical trials for the treatment of patients with biliary tract cancer; Phase II clinical trial for the treatment of patients with platinum-resistant ovarian cancer; and Phase III clinical trial for the treatment of patients with pancreatic cancer.
The company is also developing NUC-3373, a ProTide transformation of the active anti-cancer metabolite of 5-fluorouracil, which is in Phase I clinical trial for the treatment of patients with advanced solid tumors and in a Phase 1b/2 clinical trial for patients with advanced colorectal cancer; and NUC-7738, a nucleoside analog that is in Phase 1/2 clinical trial for the treatment of patients with advanced solid tumors and hematological tumors.
It has a research, collaboration, and license agreement with Cardiff University and University College Cardiff Consultants Ltd. for the design, synthesis, characterization, and evaluation of ProTides; and an assignment, license, and collaboration agreement with Cardiff ProTides Ltd.
Website: https://www.nucana.com
Latest 10-k report: https://sec.report/Document/0001564590-21-010959/
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for NCNA in the last 3 months, the stock has an average price target of $5.00, which is nearly 192% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The Regional Court of Dusseldorf issued a judgment on July 7, 2022, that Gilead Sciences Ireland UC and Gilead Sciences GmbH infringe NuCana’s composition of matter claims in European Patent 2955190 through their sales of Sovaldi®, Harvoni®, Vosevi® and Epclusa® in Germany.
- The company reported that NUC-3373 Continues Rapid Development with Multiple Data Readouts and Dosing of First Patients in Phase 3 Colorectal Cancer Study Expected in 2022. Meanwhile. NUC-7738 is Entering Phase 2 Solid Tumor and Lymphoma Study with Data Readouts Expected Throughout 2022.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Breakout from Consolidation area: The daily chart shows that the stock was consolidating within a price range for the past few days. This area is marked as a pink color rectangle. The stock has now broken out from this consolidation area with high volume and is currently trading above it. The breakout level of this consolidation area typically acts as a good support level.
NCNA – 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 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 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a purple color dotted line. This is a possible bullish indication.
NCNA – Weekly Chart
#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 NCNA is above the price of $1.82.
Target Prices: Our first target is $2.30. If it closes above that level, the second target price is $3.00.
Stop Loss: To limit risk, place a stop loss at $1.55. Note that the stop loss is on a closing basis.
Our target potential upside is 26% to 65%.
For a risk of $0.27, our first target reward is $0.48, and the second target reward is $1.18. 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. NCNA incurred net losses of £6.0 million for the year ended December 31, 2016, £23.1 million for the year ended December 31, 2017, £13.8 million for the year ended December 31, 2018, £21.4 million for the year ended December 31, 2019, and £30.7 million for the year ended December 31, 2020. As of December 31, 2020, NCNA had an accumulated deficit of £110.6 million.
NCNA – Consolidated Statements of Operations
- NCNA received written notification from The Nasdaq Stock Market LLC dated May 27, 2022, indicating that, based upon a closing bid price of less than $1.00 per share for the Company’s American Depositary Shares for the prior 30 consecutive business day period, the Company no longer satisfies Nasdaq Listing Rule 5450(a)(1).
- The company was formerly known as NuCana BioMed Limited and changed its name to NuCana plc in August 2017.
- Hedge Funds Decreased Holdings by 127.8K Shares Last Quarter.
Hedge Fund | Source: TipRanks.com
- The company has no approved products and has limited operating history depend. NCNA heavily on the success of its product candidates, Acelarin, NUC-3373, and NUC-7738.
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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