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: Compass Therapeutics, Inc. (NASDAQ: CMPX)
Today’s penny stock pick is the clinical-stage oncology-focused biopharmaceutical company, Compass Therapeutics, Inc. (NASDAQ: CMPX).
Compass Therapeutics, Inc. engages in developing antibody-based therapeutics to treat various human diseases in the United States. The company’s lead product candidates include CTX-009, a bispecific antibody that blocks Delta-like ligand 4 a ligand of Notch-1, and vascular endothelial growth factor A signaling pathways, which are critical to angiogenesis and tumor vascularization; and CTX-471, an IgG4 monoclonal antibody that is an agonist of CD137, a key co-stimulatory receptor on immune cells. It also develops CTX-8371, a bispecific inhibitor that targets PD-1 and PD-L1 checkpoint inhibitor antibodies.
Website: https://www.compasstherapeutics.com/
Latest 10-k report: https://investors.compasstherapeutics.com/static-files/a0f458e0-10de-4a9f-a8ab-5bdce4ffa6f4
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for CMPX in the last 3 months, the stock has an average price target of $7.00, which is nearly 276% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Hedge Funds Increased Holdings by 2.3M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- CMPX reported progress on its clinical development programs, including its Phase 2/3 study of tovecimig in biliary tract cancer patients, with top-line data expected by the end of the first quarter of 2025. The company also announced the advancement of CTX-10726, a novel PD-1 x VEGF-A bispecific antibody, with an Investigational New Drug application planned by the end of 2025. Furthermore, Compass Therapeutics has initiated two Phase 2 biomarker trials for tovecimig in colorectal cancer and CTX-471 in tumors expressing NCAM/CD56, anticipated to start in mid-2025.
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 with a high volume. This 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.
CMPX – 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 is a possible bullish indication. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
CMPX – 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 CMPX is above the price of $1.90.
Target Prices: Our first target is $3.10. If it closes above that level, the second target price is $4.00.
Stop Loss: To limit risk, place a stop loss at $1.20. Note that the stop loss is on a closing basis.
Our target potential upside is 63% to 111%.
For a risk of $0.70, 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. CMPX has an accumulated deficit of $315 million as of December 31, 2023.
CMPX – Consolidated Statements of Operations
- The company has a limited operating history, has no products approved for commercial sale, and has never generated revenue from product sales.
- Despite being a loss-making company, the executives are being paid significant compensation.
CMPX – Executive Compensation
- CMPX faces significant competition from other biotechnology and pharmaceutical companies. This includes the likes of Genentech, BMS, Merck & Co., and Amgen’s, and other smaller and other early-stage companies.
- The company’s principal stockholders and management own a significant percentage of the stock and will be able to exercise significant influence over matters subject to stockholder approval.
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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