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: Genius Group Limited (NYSE: GNS)
Today’s penny stock pick is the education and training services company, Genius Group Limited (NYSE: GNS).
Genius Group Limited provides entrepreneur education system business development tools and management consultancy services to entrepreneurs and entrepreneur resorts. The company operates through two segments, Education and Campus. Its courses, products, and services form a full entrepreneur education curriculum together with a full suite of tools for students.
The company also owns entrepreneur resorts in Bali and South Africa, which run entrepreneur retreats and workshops; and Genius Café, an entrepreneur beach club in Bali, as well as Genius Central, an entrepreneur co-working hub in Singapore.
In addition, it offers home childcare and investment education services; operates entrepreneur education campus that provides a range of programs from pre-primary through primary school, secondary school, and vocational college; and provides career-focused on-campus and online programs at the master’s, bachelor’s and associate degree level, as well as certificate and continuing education programs. The company operates in Europe/the Middle East/Africa, the Asia/Pacific, and North America/South America.
Website: https://www.geniusgroup.net
Latest 10-k report: https://ir.geniusgroup.net/sec-filings/all-sec-filings/content/0001410578-22-001458/gns-20211231x20f.htm
Analyst Consensus: Not covered by Wall Street analysts.
Potential Catalysts / Reasons for the Hype:
- GNS announced it was issuing a special dividend and could execute a possible stock buyback, reverse stock split, and/or dual listing in an effort to combat the suspected manipulation of its ordinary shares.
- The company released its 2023 guidance, with expected revenue of between $48 million and $52 million.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
GNS – 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 pink color dotted line. This looks like a good area for the stock to move higher.
GNS – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 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 GNS is above the price of $4.95.
Target Prices: Our first target is $7.80. If it closes above that level, the second target price is $9.30.
Stop Loss: To limit risk, place a stop loss at $3.40. Note that the stop loss is on a closing basis.
Our target potential upside is 58% to 88%.
For a risk of $1.55, our first target reward is $2.85, and the second target reward is $4.35. 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:
- The company has a history of net losses.
GNS – Consolidated Statements of Operations and Comprehensive Loss
- In 2019, 2020, and 2021, over 90% of the company’s revenues were generated from operations outside of the United States. As a global business, GNS is subject to complex economic, legal, political, tax, foreign currency, and other risks associated with international operations.
- The company has significant competition in the market segments that it serves, and such competition is expected to increase further.
- GNS has a limited operating history upon which its business and prospects can be evaluated.
- GNS is not required to disclose compensation paid to its senior management on an individual basis under the laws of Singapore. However, based on the latest form 20-F, compensation details of the Group’s officers and directors for the year 2020 and 2021 shows that the executives are being paid significant compensation.
GNS – 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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