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: Amprius Technologies, Inc. (NYSE: AMPX)
Today’s penny stock pick is the lithium-ion battery manufacturer, Amprius Technologies, Inc. (NYSE: AMPX).
Amprius Technologies, Inc. produces and sells ultra-high energy density lithium-ion batteries for mobility applications. The company offers silicon nanowire anode batteries. Its batteries are primarily used for existing and emerging aviation applications, including unmanned aerial systems, such as drones and high-altitude pseudo satellites.
Website: https://amprius.com
Latest 10-k report: https://ir.amprius.com/sec-filings/all-sec-filings/content/0001899287-24-000016/0001899287-24-000016.pdf
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for AMPX in the last 3 months, the stock has an average price target of $8.25, which is nearly 630% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company secured contracts worth over $20 million to supply high-performance cells for Light Electric Vehicle applications, with shipments expected to commence in 2024.
- Over the 3 months period, Amprius Technologies showcased positive performance, achieving a revenue growth rate of 104.96% as of 30 June, 2024.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: 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 has currently broken out from the falling wedge pattern with a high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
AMPX – 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 Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates 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.
AMPX – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#7 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 AMPX is above the price of $1.25.
Target Prices: Our first target is $1.95. If it closes above that level, the second target price is $2.30.
Stop Loss: To limit risk, place a stop loss at $0.90. Note that the stop loss is on a closing basis.
Our target potential upside is 56% to 84%.
For a risk of $0.35, our first target reward is $0.70, and the second target reward is $1.05. 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. AMPX reported net losses of $36.8 million and $17.3 million during the years ended December 31, 2023, and 2022, respectively.
AMPX – Consolidated Statements of Operations
- The company received a notice from the New York Stock Exchange (NYSE) on September 19, 2024, indicating non-compliance with continued listing criteria. The issue stems from the average closing price of Amprius’ common stock falling below $1.00 over a consecutive 30 trading-day period. AMPX faces risk of potential delisting if compliance is not regained.
- Corporate Insiders placed Informative Sells of Shares Worth $738.7K in the Last 3 Months.
Insiders | Source: TipRanks.com
- The company has geographic concentration risk as all of its revenues are earned in the United States.
- Developments in alternative technology or other fossil fuel alternatives may adversely affect the demand for the company’s battery products.
- Despite being a loss-making company, the executives are being paid significant compensation.
AMPX – 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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