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: 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/115f866b-d94b-4cda-8e3c-c7d7ae23f49d

Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for QSI in the last 3 months, the stock has an average price target of $3.38, which is nearly 105% upside from current levels.

Analysts | Source: TipRanks.com

Potential Catalysts / Reasons for the Hype:

  • The upcoming GTC Event by NVIDIA. Any breakthrough announced may likely push quantum computing stocks higher.
  • The company had recently announced major technical advances. This includes Platinum™ Pro, the Company’s evolution of Platinum, as well as Proteus™, the Company’s new cutting-edge proteomics platform of the future, which is now under development.
  • QSI’s collaboration with NVIDIA and distribution deal with Avantor Inc. could drive growth. The company had entered into an agreement with Avantor® to distribute proteomics solutions in the U.S. and Canada.

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.

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 MA: The stock is currently above its 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 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.

QSI – Weekly Chart

#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart and is also moving higher from oversold levels, indicating possible bullishness.

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 $1.70.

Target Prices: Our first target is $2.75. If it closes above that level, the second target price is $3.50.

Stop Loss: To limit risk, place a stop loss at $1.10. Note that the stop loss is on a closing basis.

Our target potential upside is 62% to 106%.

For a risk of $0.60, our first target reward is $1.05, and the second target reward is $1.80. 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. QSI incurred net losses of $101.0 million, $96.0 million, and $132.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.

    QSI – Consolidated Statements of Operations

  2. The company has ongoing legal proceedings. On May 16, 2024, a punitive class action lawsuit was filed in the Delaware Court of Chancery, styled Farzad v. HighCape Capital, et al.
  3. Hedge Funds Decreased Holdings by 3.0M Shares Last Quarter.

    Hedge Funds | Source: TipRanks.com

  4. The company has only recently commercialized its first product. QSI has a limited operating history and has generated limited revenue to date. This makes it difficult to evaluate the prospects for the company’s future viability and predict its future performance.
  5. Corporate Insiders placed Informative Sells of Shares Worth $5.6K in the Last 3 Months.

    Insiders | Source: TipRanks.com

  6. 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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