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: Yield10 Bioscience, Inc. (NASDAQ: YTEN)
Today’s penny stock pick is the agricultural bioscience company, Yield10 Bioscience, Inc. (NASDAQ: YTEN).
Yield10 Bioscience, Inc. (YTEN) engages in developing technologies to enable step-change increases in crop yield in the United States and Canada. The company, through its Trait Factory, a trait gene discovery platform develops enhanced oilseed Camelina sativa for the production of proprietary seed products; and discovers high value genetic traits for the agriculture and food industries. Yield10 Bioscience, Inc. has license agreements with GDM Seeds; J. R. Simplot; Forage Genetics International, LLC; and Bayer AG.
Website: https://www.yield10bio.com
Latest 10-k report: https://ir.yield10bio.com/sec-filings/sec-filing/10-k/0001121702-22-000008
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for YTEN in the last 3 months, the stock has an average price target of $6.00, which is nearly 186% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company inked MOU with Mitsubishi for the development, offtake, and commercialization of Camelina as a low-carbon feedstock oil for biofuels.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel Breakout: The daily chart shows that the stock has broken out of a downtrend channel, which is shown as purple color lines. This is a possible bullish indication.
YTEN – 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 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.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates 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 looks like a good area for the stock to move higher.
YTEN – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart and is also moving higher from oversold levels, indicating possible bullishness.
#7 Bullish RSI: The RSI is moving higher from oversold levels, 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 YTEN is above the price of $2.30.
Target Prices: Our first target is $3.30. If it closes above that level, the second target price is $5.50.
Stop Loss: To limit risk, place a stop loss at $1.80. Note that the stop loss is on a closing basis.
Our target potential upside is 43% to 139%.
For a risk of $0.50, our first target reward is $1.00, and the second target reward is $3.20. This is a nearly 1:2 and 1:6 risk-reward trade.
In other words, this trade offers 2x to 6x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. As of December 31, 2021, the company’s accumulated deficit was $386,131.
YTEN – Consolidated Statements of Operations
- The company was formerly known as Metabolix, Inc. and changed its name to Yield10 Bioscience, Inc. in January 2017.
- Hedge Funds Decreased Holdings by 6.2K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company requires additional funding to finance its operations. In case YTEN issues equity or debt securities to raise additional funds in the future, it may incur fees associated with such issuances, and existing stockholders may experience dilution from the issuance of new equity securities.
- Despite being a loss-making company, the executives are being paid significant compensation.
YTEN – 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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