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: Polished.Com Inc. (NYSEAMERICAN: POL)
Today’s penny stock pick is the retail-home furniture, furnishings & equipment store, Polished.Com Inc. (NYSEAMERICAN: POL).
Polished.Com Inc. operates an e-commerce platform for appliances, furniture, and home goods in the United States. The company offers household appliances, including refrigerators, ranges, ovens, dishwashers, microwaves, freezers, washers, and dryers. It also sells furniture, décor, bed and bath, lighting, outdoor living, electronics, fitness equipment, plumbing fixtures, air conditioners, fireplaces, fans, dehumidifiers, humidifiers, air purifiers, and televisions. In addition, the company provides appliance installation services and old appliance removal services.
Website: https://www.goedekers.com
Latest 10-k report: https://sec.report/Document/0001213900-22-023264 (Amended), https://sec.report/Document/0001213900-22-016393/ (original)
Analyst Consensus: As per TipRanks Analytics, based on 6 Wall Street analysts offering 12-month price targets for POL in the last 3 months, the stock has an average price target of $30.33, which is nearly 3866% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Rumors of a potential buyout.
- POL announced the engagement of a leading strategic consulting firm with retail and ecommerce operations expertise to augment its existing management, identify opportunities to accelerate long-term profitable growth and, separately, to potentially expedite the Audit Committee of the Board of Directors’ ongoing investigation.
- Hedge Funds Increased Holdings by 491.8K 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 has been forming a downtrend channel, which is shown as purple color lines. The stock is currently moving higher after taking support at the bottom rail of the downtrend channel. This is a possible bullish indication.
POL – 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 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.
POL – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart indicating possible bullishness.
#7 MACD above Signal Line: In the weekly chart as well, 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 POL is above the price of $0.78.
Target Prices: Our first target is $1.00. If it closes above that level, the second target price is $1.40.
Stop Loss: To limit risk, place a stop loss at $0.65. Note that the stop loss is on a closing basis.
Our target potential upside is 28% to 80%.
For a risk of $0.13, our first target reward is $0.22, and the second target reward is $0.62. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of losses. POL had reported a net loss of $21.6 million for the year ended December 31, 2020.
POL – Consolidated Statements of Operations
- POL received a notice from the New York Stock Exchange that indicated because the Company did not file its Quarterly Report on Form 10-Q for the quarter that ended June 30, 2022, on time, it is not in compliance with the continued listing requirements under the timely filing criteria established in the NYSE American Company Guide.
- Despite being a company with a history of losses, the executives are being paid significant compensation.
POL – Executive Compensation
- A Class Action Complaint was filed in the Court of Chancery against the Company and its Board of Directors on March 1, 2022. The lawsuit, captioned Scot T. Boden v. 1847 Goedeker Inc., et al., C.A. No. 2022-0196-SG asserts two claims for relief. The first is against the Company for alleged violation of the Delaware General Corporation Law Section 225(b) for the improper tabulation of the stockholder vote on the Share Increase Proposal. The second asserts that the Company’s directors breached their fiduciary duties by incorrectly tabulating the stockholder vote, and by causing a purportedly invalid amendment to its Certificate of Incorporation to be filed with the Delaware Secretary of State.
- The company was incorporated in 2019, and, as such, has a limited operating history. The company was formerly known as 1847 Goedeker Inc. On July 20, 2022, the Company changed its name from 1847 Goedeker Inc. to Polished.com Inc.
- Some of the company’s directors and officers could be in a position of conflict of interest.
- Executive Chairman, Ellery W. Roberts, is the controlling principal of 1847 Partners LLC which provides services like administrative supervision and oversight of day-to-day business operations, for a quarterly management fee equal to $62,500.
- Edward J. Tobin, a member of our board of directors, also serves as a director of 1847 Partners LLC.
- The company’s Chief Executive Officer and member of the board of directors, Albert Fouerti, is on the board of directors of DMI. The Company and two of its subsidiaries have also entered lease agreements with entities owned by Mr. Fouerti.
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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