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: ParaZero Technologies Ltd. (NASDAQ: PRZO)
Today’s penny stock pick is the Israel-based aerospace company, ParaZero Technologies Ltd. (NASDAQ: PRZO).
ParaZero Technologies Ltd. engages in the design, development, manufacturing, distribution, and sale of autonomous parachute safety systems for commercial drones in the United States, Israel, Canada, Europe, and internationally. The company offers SafeAir system, a smart parachute system that monitors unmanned aerial systems flight in real-time, as well as identifies critical failures and autonomously triggers a parachute in the event of an emergency.
Its autonomous parachute system portfolio includes SafeAir Phantom, SafeAir Mavic, SafeAir M-200 Pro, SafeAir M-300 Pro, SafeAir M-600 Pro, SafeAir V1EX, SafeAir 350, and Custom Integrations. The company serves system manufacturers, resellers, and online stores. ParaZero’s one-of-a-kind patented technology allows parachute deployment on drones within milliseconds using an autonomous computer and a ballistic parachute launcher.
Website: https://www.parazero.com
Latest 10-k report: https://www.sec.gov/Archives/edgar/data/1916241/000121390023060299/f424b40723_parazero.htm
Analyst Consensus: Not covered by Wall Street analysts.
Potential Catalysts / Reasons for the Hype:
- The company and its partner OVRL received Australian authorization for drones to operate over-populated areas and near people while using PRZO safety systems.
- PRZO had recently received a second order for its custom drone safety system from one of the world’s largest automotive manufacturers.
- The company also launched the SafeAir M350 Pro and the SafeAir M30 Pro for DJI’s New Enterprise Drones.
- The recent Israel war has increased the interest and focus on the company’s drone offerings.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel Breakout: The daily chart shows that the stock has broken out of a downtrend channel, which is shown as orange color lines. This is a possible bullish indication.
PRZO – 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 Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#4 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.
PRZO – Weekly Chart
#5 Bullish OBV: The weekly chart shows that the OBV indicator is currently rising. OBV rises when volume on up weeks outpaces volume on down weeks. A rising OBV typically reflects positive volume pressure that can lead to higher prices.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PRZO is above the price of $2.80.
Target Prices: Our first target is $4.10. If it closes above that level, the second target price is $5.00.
Stop Loss: To limit risk, place a stop loss at $3.10. Note that the stop loss is on a closing basis.
Our target potential upside is 46% to 79%.
For a risk of $0.70, our first target reward is $1.30, 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 is an Israeli corporation based in Israel and has a history of name changes. The company was incorporated on June 30, 2013, under the name ParaZero Ltd. On September 6, 2018, the name was changed to ParaZero Israel Ltd., and on November 4, 2018, the name was changed to our current name, ParaZero Technologies Ltd.
- The company had reported significant net losses since its inception in 2013, including net losses of $1,653,038 and $615,381 for the years ended December 31, 2022, and 2021, respectively. As of December 31, 2022, the company had accumulated losses of $14,651,678.
PRZO – Consolidated Statements of Operations
- The company has only 11 employees.
PRZO – Employees
- The company had less than $1.235 billion in revenue during its last fiscal year, qualifying as an “emerging growth company”. For up to five years, an emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. Moreover, the Company’s products are sold in rapidly evolving and highly competitive markets. The commercial unmanned aerial vehicle, or UAV, market is in the early stages of customer adoption. All these make it difficult to evaluate the Company’s business and future prospects.
- PRZO has not generated any significant revenue since its inception and will require substantial additional capital to commercialize its products. Failure to obtain this necessary capital when needed may force the company to delay, limit, or terminate its product development efforts or other operations.
- The company’s audited financial statements for the year ended December 31, 2022, and for the year ended December 31, 2021, contain an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern.
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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