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: Kinross Gold Corporation (NYSE: KGC)
Today’s penny stock pick is the Canada-based gold and silver mining company, Kinross Gold Corporation (NYSE: KGC).
Kinross Gold Corporation engages in the acquisition, exploration, and development of gold properties principally in the United States, the Russian Federation, Brazil, Chile, Ghana, and Mauritania. It is also involved in the extraction and processing of gold-containing ores; reclamation of gold mining properties; and production and sale of silver.
Website: https://www.kinross.com
Latest 10-k report: https://sec.report/Document/0001104659-22-041156/
Analyst Consensus: As per TipRanks Analytics, based on 9 Wall Street analysts offering 12-month price targets for KGC in the last 3 months, the stock has an average price target of $6.09, which is nearly 78% upside from current levels.
Analysts | Source: Tipranks.com
Potential Catalysts / Reasons for the Hype:
- KGC recently released Q2 earnings showed that it produced 557,500 gold-equivalent ounces last quarter, representing a 4% increase versus the same period a year earlier.
KGC – Q2 Report
- The company has been operating a relatively stable business and has a dividend yield of 3.3%.
- Hedge Funds Increased Holdings by 3.2M Shares Last Quarter.
Hedge Funds | Source: Tipranks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel: The daily chart shows that the stock is currently trading within a downtrend channel and looks poised for a breakout from it. The downtrend channel is shown as purple color lines. This is a possible bullish indication.
KGC – Daily Chart
#2 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#3 Bullish RSI: The RSI is currently near 50 and moving higher, indicating possible bullishness.
#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 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.
KGC – 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 KGC is above the price of $3.52.
Target Prices: Our first target is $4.00. If it closes above that level, the second target price is $4.70.
Stop Loss: To limit risk, place a stop loss at $3.25. Note that the stop loss is on a closing basis.
Our target potential upside is 14% to 34%.
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:
- Corporate Insiders Sold Shares Worth $123.9K in the Last 3 Months.
Insiders | Source: Tipranks.com
- In May 2015, the Chilean environmental enforcement authority commenced an administrative proceeding against Compania Minera Maricunga, a subsidiary of Kinross Gold Corporation, alleging that pumping of groundwater to support the Maricunga operation had impacted area wetlands.
- In the fourth quarter of 2020 and first quarter of 2021, a subsidiary of Kinross, Sunnyside Gold Corporatio and Kinross had to reach settlements with the Navajo Nation, the State of New Mexico, and the State of Utah.
- The profitability of Kinross’ operations is significantly affected by changes in the market price of gold and silver. The exploration and development of mineral deposits also involve significant financial and other risks over an extended period of time which may not be eliminated even with careful evaluation, experience, and knowledge.
- The company’s net earnings have significantly declined year-over-year.
KGC – 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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