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: Ambrx Biopharma Inc. (AMAM)
Today’s penny stock pick is the clinical-stage biologics company, Ambrx Biopharma Inc. (AMAM).
Ambrx Biopharma Inc. discovers and develops engineered precision biologics using its proprietary expanded genetic code technology platform. Its lead product candidate is ARX788, an anti-HER2 antibody-drug conjugate (ADC), which is investigated in various clinical trials for the treatment of breast cancer, gastric/gastroesophageal junction cancer, and other solid tumors, including ongoing Phase 2/3 clinical trials for the treatment of HER2-positive metastatic breast cancer and gastric cancer.
The company is also developing two earlier-stage product candidates, including ARX517, an anti-PSMA ADC, which is in Phase 1 clinical trial for the treatment of prostate cancer and other solid tumors; and ARX305, an anti-CD70 ADC in investigational new drug-enabling studies for the treatment of renal cell carcinoma and other cancers.
In addition, it is developing other multiple product candidates targeting immuno-oncology applications, which include ARX822, a fab-small molecule bispecific that is in preclinical development for cancers; and ARX102, an immuno-oncology IL-2 pathway agonist to stimulate the patient’s own immune system by targeting the ß and gamma receptors on the cytotoxic T cell. Ambrx Biopharma Inc. has collaborations with Bristol Myers Squibb Company; AbbVie Inc.; BeiGene; Sino Biopharmaceutical Co., Ltd.; NovoCodex; and Elanco Animal Health.
Website: https://ambrx.com
Latest 10-k report: https://ir.ambrx.com/financials/sec-filings/sec-filings-details/default.aspx?FilingId=15754241
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for AMAM in the last 3 months, the stock has an average price target of $4.00, which is nearly 24% upside from current levels.
Potential Catalysts / Reasons for the Hype:
- The company recently announced encouraging initial data from its ongoing Phase 1 trial (APEX-01) for ARX517, a drug designed to tackle advanced-stage prostate cancer. ARX517 is the Company’s proprietary anti-prostate-specific membrane antigen (PSMA) antibody drug conjugate (ADC) in prostate cancer patients. APEX-01 is the only ongoing clinical trial in the United States targeting PSMA with an ADC.
Analysts | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out a symmetrical triangle pattern, which is marked as purple color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.
AMAM – 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.
AMAM – 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 AMAM is above the price of $3.30.
Target Prices: Our first target is $4.60. If it closes above that level, the second target price is $6.00.
Stop Loss: To limit risk, place a stop loss at $2.50. Note that the stop loss is on a closing basis.
Our target potential upside is 39% to 82%.
For a risk of $0.80, our first target reward is $1.30, and the second target reward is $2.70. 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. For the year ended December 31, 2021, AMAM’s net loss was $68.1 million.
AMAM – Consolidated Statements Of Operations
- As a clinical-stage biologics company with a limited operating history, thereby making it quite difficult to evaluate the success and future viability of the business.
- Despite being a loss-making company, the aggregate compensation accrued or paid to the members of AMAM’s executive officers for services in all capacities was approximately $980,100 for the year ended December 31, 2021.
- The company is anticipated to finance its operations through equity offerings, debt financings, or other capital sources, including potential grants, collaborations, licenses, or other similar arrangements. Raising additional capital may cause dilution to shareholders restrict AMAM’s operations or requires the company to relinquish rights to its technologies or product candidates.
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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