Trade This $5 Stock for a 50%-82% Potential Upside

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: SEALSQ Corp (NASDAQ: LAES)

Today’s penny stock pick is the semiconductor chips manufacturer, SEALSQ Corp (NASDAQ: LAES).

SEALSQ Corp designs, develops, and markets semiconductor chips in Europe, the Middle East, Africa, North America, the Asia Pacific, and Latin America. It offers semiconductors, such as VaultIC secure elements, secure arm platform, and smart card reader chips; identity provisioning services, such as IoT device provisioning and chip provisioning; and managed PKI for IoT solutions and trust services.

The company provides device-to-cloud authentication, device attestation for matter, GSMA root certificate, device-to-device authentication, data protection, anti-counterfeiting and brand protection, security access, device ID provisioning, identity lifecycle management, and satellite IoT connectivity solutions. Its products are used in various applications, such as smart energy, smart home, automotive EV charging, consumer IoT, aerospace and military, telecommunications, logistics, medical, luxury, and other industrial applications.

Website:  https://www.sealsq.com/

Latest 10-k report:  https://www.sec.gov/Archives/edgar/data/1951222/000119380524000423/0001193805-24-000423-index.htm

Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst, the stock has a “Moderate Buy” rating.

Potential Catalysts / Reasons for the Hype:

• The company recently announced the integration of its latest post-quantum cryptographic chips on WISeSat satellites.
• LAES had formed a strategic partnership with Hedera to deliver next-generation quantum-resistant semiconductors, integrating cutting-edge security solutions to protect critical infrastructures in the emerging post-quantum world.

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 and is moving higher. The downtrend channel is shown as purple color lines. This is a possible bullish indication.

#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 short-term moving average of 50-day SMA as well as its long-term moving average of 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-day SMA, indicating that the bulls are gaining control.

#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 LAES is above the price of $4.95.

Target Prices: Our first target is $7.40. If it closes above that level, the second target price is $9.00.

Stop Loss: To limit risk, place a stop loss at $3.60. Note that the stop loss is on a closing basis.

Our target potential upside is 50% to 82%.

For a risk of $1.35, our first target reward is $2.45, and the second target reward is $4.05. 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:

1. The company has a history of net losses. In the year ended December 31, 2023, the company reported a net loss of USD 3.3 million.
   

   LAES – Consolidated Statements of Operations

2. Historically, the company has been dependent on financing from its parent, WISeKey International Holding Ltd or other investors to augment the operating cash flow to cover its cash requirements.
3. The company has a limited operating history. On January 1, 2023, SEALSQ Corp, then a so-called empty shell private company with no operating activities that was not considered a business under US GAAP standards, acquired WISeKey Semiconductors SAS, a private operating company, and its affiliates. The newly formed company was then listed on the Nasdaq stock exchange on May 23, 2023 through a spin-off by WISeKey of 20% of the ordinary share capital.
4. The company completed a registered direct offering of 13,157,896 ordinary shares at $1.90 per share, raising $25.0 million in gross proceeds. This brings the total gross proceeds from financings this week to $60.0 million. However, this has resulted in significant shareholder dilution in the near-term.
5. Shares for the direct offering offered at $1.90 could also potentially impact market price.

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.

Nvidia's Secret Partner... This Is The New AI Chip Powerhouse [sponsor]
I bet you've never heard of it... but this newly public company is set to become key to Nvidia's seat on the AI throne. And for now... you can get in while it's still cheap. Details Here! Find Out What It Is Right Here.