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: Imperial Petroleum Inc. (NASDAQ: IMPP)
Today’s penny stock pick is the international seaborne transportation services company, Imperial Petroleum Inc. (NASDAQ: IMPP).
Imperial Petroleum Inc. provides international seaborne transportation services to oil producers, refineries, and commodities traders. It carries refined petroleum products, such as gasoline, diesel, fuel oil, and jet fuel, as well as edible oils and chemicals, crude oils, iron ore, coal and grains, and minor bulks, such as bauxite, phosphate, and fertilizers. As of March 28, 2023, the company owned and operated a fleet of five medium range refined petroleum product tankers; one Aframax tanker; two suezmax tankers; and four handysize drybulk carriers with a total capacity of 807,804 deadweight tons.
Website: https://www.imperialpetro.com
Latest 10-k report: https://www.sec.gov/ix?doc=/Archives/edgar/data/1876581/000119312523089710/d419904d20f.htm
Analyst Consensus: Not covered By Wall Street analysts.
Potential Catalysts / Reasons for the Hype:
- Hedge Funds Increased Holdings by 398.1K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- IMPP recorded net income of $12.1 million in the third quarter of 2023. The company’s cash and equivalents currently total $125.9 million at September 30, 2023, significantly exceeding its current market capitalization.
- The company repurchased more than one million shares of common stock, demonstrating confidence in its own value. In addition, a strategic move involved the repurchase of 2.58 million outstanding warrants to effectively manage its capital structure.
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.
IMPP – 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 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.
#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. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
IMPP – Weekly Chart
#6 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 IMPP is above the price of $2.50.
Target Prices: Our first target is $3.70. If it closes above that level, the second target price is $4.60.
Stop Loss: To limit risk, place a stop loss at $1.90. Note that the stop loss is on a closing basis.
Our target potential upside is 48% to 84%.
For a risk of $0.60, our first target reward is $1.20, and the second target reward is $2.10. 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. IMPP had reported a net loss of $3.6 million for the year ended December 31, 2021.
IMPP – Consolidated statements of operations
- The Charter rates for dry bulk vessels are volatile and may remain at currently low levels or decrease in the future, which may adversely affect the company’s results of operations and financial condition.
- The company had received written notification from Nasdaq, dated June 17, 2022, indicating that because the closing bid price of its common stock for 30 consecutive business days, from May 5, 2022, to June 16, 2022, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, the Company was not in compliance with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2).
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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