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: Fortress Biotech, Inc. (NASDAQ: FBIO)
Today’s penny stock pick is the biopharmaceutical company, Fortress Biotech, Inc. (NASDAQ: FBIO).
Fortress Biotech, Inc. develops and commercializes pharmaceutical and biotechnology products. The company markets dermatology products, such as Ximino capsules to treat only inflammatory lesions of non-nodular moderate to severe acne vulgaris; Targadox for severe acne; Exelderm cream for ringworm and jock itch symptoms; Qbrexza a medicated cloth towelette for the treatment of primary axillary hyperhidrosis; Luxamend for dressing and managing wounds; and Accutane capsules for severe recalcitrant nodular acne.
It also develops late stage product candidates, such as intravenous Tramadol for the treatment of post-operative acute pain; CUTX-101, an injection for the treatment of Menkes disease; MB-107 and MB-207 for the treatment of X-linked severe combined immunodeficiency; Cosibelimab for metastatic cancers; CK-101 for the treatment of patients with EGFR mutation-positive NSCLC; CAEL-101 for the treatment of amyloid light chain amyloidosis; Triplex vaccine for cytomegalovirus; and CEVA101 for the treatment of severe traumatic brain injury in adults and children.
The company’s early stage product candidates include MB-102 for blastic plasmacytoid dendritic cell neoplasm; MB-101 for glioblastoma; MB-104 for multiple myeloma and light chain amyloidosis; MB-106 for B-cell non-hodgkin lymphoma; MB-103 for GBM & metastatic breast cancer to brain; MB-108; MB-105 for prostate and pancreatic cancers; and BAER-101.
Its preclinical product candidates comprise AAV-ATP7A gene therapy; AVTS-001 gene therapy; CK-103 BET inhibitor; CEVA-D and CEVA-102; CK-302, an anti-GITR; CK-303, an anti-CAIX; ConVax; and ONCOlogues, and oligonucleotide platform. It has collaboration arrangements with universities, research institutes, and pharmaceutical companies.
Website: https://www.fortressbiotech.com
Latest 10-k report: https://www.fortressbiotech.com/investors/sec-filings/all-sec-filings/content/0001558370-22-004487/fbio-20211231x10k.htm
Analyst Consensus: Not Covered By Wall Street analysts.
Potential Catalysts / Reasons for the Hype:
- Corporate Insiders Bought Shares Worth $3.3M in the Last 3 Months.
Insiders | Source: TipRanks.com
- The company already has approval on more than one drug and has a robust pipeline.
- Rumors of potential approval of BLA from FDA for Checkpoint Therapeutics’ cosibelimab for treatment of Advanced Cutaneous Squamous Cell Carcinoma. Checkpoint Therapeutics is a clinical-stage immunotherapy and targeted oncology company that was founded and is majority controlled by Fortress Biotech.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern: 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 currently looks poised for a breakout from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
FBIO – 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 Bullish RSI: The RSI is currently nearing 50 and moving higher, indicating possible bullishness.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible 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.
FBIO – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, 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 FBIO is above the price of $0.89.
Target Prices: Our first target is $1.30. If it closes above that level, the second target price is $1.60.
Stop Loss: To limit risk, place a stop loss at $0.70. Note that the stop loss is on a closing basis.
Our target potential upside is 46% to 80%.
For a risk of $0.19, our first target reward is $0.41, and the second target reward is $0.71. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has had a history of net losses since its inception. The company reported losses of $188.5 million and $94.3 million for the years ended December 31, 2021, and 2020, respectively, and had an accumulated deficit of approximately $547.5 million as of December 31, 2021.
FBIO – Consolidated Statements of Operations
- The company was formerly known as Coronado Biosciences, Inc. and changed its name to Fortress Biotech, Inc. in April 2015.
- The company has significant debt. As of December 31, 2021, the total amount of debt outstanding, net of the debt discount, was $42.9 million. FBIO’s current credit arrangement with Oaktree Capital restricts its ability to take certain actions, like acquisitions or financings that would promote future growth.
- Despite being a loss-making company, the executives are being paid significant compensation.
FBIO – 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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