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: GlycoMimetics Inc. (NASDAQ: GLYC)
Today’s penny stock pick is the clinical-stage biotechnology company, GlycoMimetics Inc. (NASDAQ: GLYC).
GlycoMimetics Inc. focuses on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting from diseases in the United States. It is developing uproleselan, an E-selectin inhibitor, which is used in combination with chemotherapy to treat acute myeloid leukemia (AML), as well as in phase 3 trial to treat relapsed/refractory AML.
In addition, the company is developing GMI-1359, which targets e-selectin and a chemokine receptor for the treatment of cancers that affect the bone and bone marrow, including solid tumors. It also develops various other programs, including GMI-1687, an antagonist of E-selectin to treat vaso-occlusive crisis; and galectin-3 antagonists, a carbohydrate-binding protein.
The company has a cooperative research and development agreement with the National Cancer Institute; and a collaboration and license agreement with Apollomics (Hong Kong) Limited for the development and commercialization of uproleselan and GMI-1687.
Website: https://www.glycomimetics.com
Latest 10-k report: https://ir.glycomimetics.com/static-files/31f5c31e-6da4-4758-aaf1-1760f347e151
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for GLYC in the last 3 months, the stock has an average price target of $8.00, which is nearly 200% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company reported an EPS beat in its Q3 report.
- The company announced a positive update on its Phase 3 study of its relapsed/refractory acute myeloid leukemia (AML) candidate. Data from a blinded pooled survival data set showed patients lived longer than expected.
- Corporate Insiders Bought Shares Worth $731.9K 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 Breakout From Flag Pattern: The daily chart shows that the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in purple color in the chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
GLYC – 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 MAs: The stock is currently above its 50-day as well as 200-day SMA, indicating that the bulls have currently gained control.
#4 Bullish RSI: The RSI is above 50 and moving higher, indicating possible bullishness.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#6 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 looks like a good area for the stock to move higher. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
GLYC – 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.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for GLYC is above the price of $2.75.
Target Prices: Our first target is $4.00. If it closes above that level, the second target price is $5.00.
Stop Loss: To limit risk, place a stop loss at $2.00. Note that the stop loss is on a closing basis.
Our target potential upside is 46% to 82%.
For a risk of $0.75, our first target reward is $1.25, and the second target reward is $2.25. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- Since its inception, the company had incurred significant operating losses. GLYC had an accumulated deficit of $372.9 million as of December 31, 2021.
GLYC – Statements of Operations and Comprehensive Loss
- The company requires substantial additional funding in connection with its continuing operations. GLYC is expected to finance its cash needs through a combination of equity offerings, debt financings, and license and development agreements. Raising additional capital may cause dilution to stockholders, restrict the company’s operations or require GLYC to relinquish rights to its drug candidates.
- Uproleselan is the only drug candidate that is in Phase 2 or Phase 3 clinical trial. GLYC’s other drug candidates are still in Phase 1 clinical trials or in preclinical development.
- Despite being a loss-making company, the executives are being paid millions in compensation.
GLYC – 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.
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