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: FingerMotion, Inc. (NASDAQ: FNGR)
Today’s penny stock pick is the mobile data specialist company, FingerMotion, Inc. (NASDAQ: FNGR).
FingerMotion, Inc., headquartered in Singapore, provides a mobile payment and recharge platform system in China. The company offers telecommunication products and services, including data plans, subscription plans, mobile phones, and loyalty points redemption services; bulk short message service and multimedia messaging services; and Rich Communication Services (RCS) platform, a proprietary business messaging platform that enables businesses and brands to communicate and service their customers on the 5G infrastructure.
It also operates Sapientus, a proprietary big data insights platform that delivers data-driven for businesses in the insurance, healthcare, and financial services industries. In addition, the company offers value-added products and services.
Website: https://fingermotion.com
Latest 10-k report: https://www.fingermotion.com/templates/fingermotion/files/new_sec_filings/Form%2010-K%20filed%20by%20FINGERMOTION,%20INC.%20on%202023-05-30.html
Analyst Consensus: Not Covered By Wall Street Analysts.
Potential Catalysts / Reasons for the Hype:
- The company recently reported FY 2023 Financial Results. FNGR announced annual revenue of $34.05 million which was an increase of $11.12 million or 49% compared to FY 2022
- FNGR recently entered into a cooperation agreement with Migu Video Technology Co., Ltd. to start in-depth collaboration on overseas hardware and terminal business.
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.
FNGR – 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 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 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.
#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.
FNGR – Weekly Chart
#6 Fibonacci Support: Usually, after an up-move, stocks retrace to any of the key Fibonacci levels
#7 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 FNGR is above the price of $2.95.
Target Prices: Our first target is $4.00. If it closes above that level, the second target price is $4.90.
Stop Loss: To limit risk, place a stop loss at $2.30. Note that the stop loss is on a closing basis.
Our target potential upside is 36% to 66%.
For a risk of $0.65, our first target reward is $1.05, and the second target reward is $1.95. 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. FNGR generated net losses of approximately $7.5 million, $4.9 million, and $4.3 million for the years ended February 28, 2023, 2022, and 2021, respectively. As of February 28, 2023, the company had an accumulated deficit of $24.7 million.
FNGR – Consolidated Statements of Operations
- FNGR has a limited operating history, which makes it difficult to forecast its future results.
- The company has customer concentration risk, as it currently derives a substantial amount of its total revenue through contracts secured with China Unicom and China Mobile.
- Despite being a loss-making company, the executives are being paid significant compensation.
FNGR – Executive Compensation
- FNGR started trading on the Nasdaq Capital Market only on December 28, 2021, and before that, it traded on the OTCQX operated by OTC Markets Group Inc.
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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