We recently started a series called “Penny Stock of the Day”. These ideas are geared toward 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: Quantum-Si incorporated (NASDAQ: QSI)
Today’s penny stock pick is the life sciences company, Quantum-Si incorporated (NASDAQ: QSI).
Quantum-Si incorporated engages in the development of single-molecule detection platform to enable Next Generation Protein Sequencing (NGPS). The company’s platform is comprised of the Platinum NGPS instrument; the Platinum Analysis Software service; Proteus, transforming proteomic research; and reagent kits and semiconductor chips for use with its instruments.
It is used in protein identification, protein variants, antibody characterization, biomarker identification, and post translational modification analysis applications. The company has a collaboration with SkyWaterTechnology for the development of consumable for Proteus, that will enable simultaneous protein sequencing.
Website: https://www.quantum-si.com/
Latest 10-k report: https://ir.quantum-si.com/static-files/1f73c371-b62a-4363-a95a-2095d33ebac6
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for QSI in the last 3 months, the stock has an average price target of $3.25, which is nearly 63% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- QSI released its barcoding kit, allowing users to precisely and cost efficiently identify proteins of interest. The protein Barcoding Kit offers a multiplexed solution for efficient protein screening using peptide barcodes, tailored to the needs of biopharma research.
- The company had announced a collaboration with NVIDIA to develop its new proteomics platform, Proteus™, and advance Quantum-Si’s core technologies of amino acid binders and aminopeptidases using NVIDIA AI and accelerated computing.
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 purple color lines. This is a possible bullish indication.
QSI – 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 and 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 is a possible bullish indication. The stock is also trading above its 50-week SMA, indicating that the bulls have started to gain control.
QSI – 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 QSI is above the price of $2.05.
Target Prices: Our first target is $3.20. If it closes above that level, the second target price is $4.00.
Stop Loss: To limit risk, place a stop loss at $1.40. Note that the stop loss is on a closing basis.
Our target potential upside is 56% to 95%.
For a risk of $0.65, our first target reward is $1.15, 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. QSI incurred net losses of $96.0 million, $132.4 million, and $95.0 million for the fiscal years ended December 31, 2023, 2022, and 2021, respectively.
QSI – Consolidated Statements of Operations
- The company has ongoing legal proceedings. In October 2023, the contract manufacturer that had manufactured QSI’s Platinum® and CarbonTM instruments filed a complaint in the state of Texas alleging breach of contract and made claims for economic damage under the contract as well as attorney costs.
- Hedge Funds Decreased Holdings by 565.9K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company faces significant competition in the life sciences technology market. QSI’s competitors include Agilent Technologies, Bio-Rad Laboratories, Danaher, Luminex, Merck (and its subsidiary MilliporeSigma) and Thermo Fisher Scientific.
- QSI was notified by the Nasdaq on November 4, 2024, that its stock price had fallen below the $1.00 threshold for 30 consecutive business days, violating the Nasdaq Global Market’s listing rules.
- Despite being a loss-making company, the executives are being paid significant compensation.
QSI – 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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