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: SKYX Platforms Corp. (NASDAQ: SKYX)
Today’s penny stock pick is the safe-smart platform technologies company, SKYX Platforms Corp. (NASDAQ: SKYX).
SKYX Platforms Corp.’s first-generation technologies enable light fixtures, ceiling fans, and other electrically wired products to be installed into a ceiling’s electrical outlet box; and second-generation technology provides a platform that is designed to enhance safety and lifestyle of homes and other buildings.
It provides power-plugs and universal power-plug and receptacle products. In addition, it offers smart products, such as SkyHome App; sky smart universal power-plug and receptacle; sky – smart plug and play ceiling fans and lightings, and all-in-one smart sky platform.
Website: https://www.skyplug.com
Latest 10-k report: https://dd7pmep5szm19.cloudfront.net/2697/0001493152-23-010336.htm
Analyst Consensus: Not Covered By Wall Street Analysts.
Potential Catalysts / Reasons for the Hype:
- The company’s Director Dov Shiff made the biggest insider purchase in the last 12 months. That single transaction was for US$54k worth of shares.
- SKYX recently acquired Bailey Street Home, a $5 million revenue, profitable, strategic e-commerce private label lighting website.
- Reports that the company is expected to generate positive profits of US$16m in 2023.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Symmetrical Triangle Pattern: The daily chart shows that the stock has currently formed 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.
SKYX – 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.
SKYX – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 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.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for SKYX is above the price of $3.70.
Target Prices: Our first target is $4.90. If it closes above that level, the second target price is $5.90.
Stop Loss: To limit risk, place a stop loss at $3.00. Note that the stop loss is on a closing basis.
Our target potential upside is 32% to 59%.
For a risk of $0.70, our first target reward is $1.20, and the second target reward is $2.20. 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. SKYX reported net losses from operations of approximately $26.6 million and $5.2 million during 2022 and 2021, respectively.
SKYX – Consolidated Statements of Operations
- The company was formerly known as SQL Technologies Corp. and changed its name to SKYX Platforms Corp. in June 2022.
- Despite being a loss-making company, the executives are being paid significant compensation.
SKYX – Executive Compensation
- SKYX has a relatively high level of debt – the company’s debt is nearly 55% of equity. The company has limited financial resources and faces risks associated with financing its debt financing.
- SKYX’s third-party manufacturers and many of its suppliers are located in China, which exposes the company to additional risks like inventory shortages and greater supply chain compliance costs.
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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