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: Ondas Holdings Inc. (NASDAQ: ONDS)
Today’s penny stock pick is the autonomous drone and wireless communication solutions, Ondas Holdings Inc. (NASDAQ: ONDS).
Ondas Holdings Inc. provides private wireless, drone, and automated data solutions in the United States and internationally. It operates through two segments: Ondas Networks and Ondas Autonomous Systems. The company designs, develops, manufactures, sells, and supports FullMAX, a software defined radio (SDR) platform for wide-area broadband networks. Its FullMAX SDR platform enables secure and reliable industrial-grade connectivity for truly mission-critical applications.
It provides Optimus, an AI-powered drone with imaging payloads; the Airbase, a ruggedized weatherproof base station for housing, data processing, and cloud transfer; Insightful, a secure web portal and API, which enables remote interaction with the system, data, and resulting analytics anywhere in the world; and the Raider, a counter-drone system for security and the protection of critical infrastructure, assets, and people from the threat of hostile drones. It serves users in rail, energy, mining, agriculture, public safety, critical infrastructure, and government markets.
Website: https://www.ondas.com/
Latest 10-k report: https://ir.ondas.com/all-sec-filings/content/0001213900-25-022968/0001213900-25-022968.pdf
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for ONDS in the last 3 months, the stock has an average price target of $2.67, which is nearly 53% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- ONDS benefits from growing demand for AI-driven autonomous systems and drone technology, particularly in defense and industrial sectors. This aligns with broader AI tailwinds boosting tech stocks.
- Hedge Funds Increased Holdings by 31.2K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Potential government contracts, including a rumored $50M allocation for drone defense under a Trump executive order, could significantly boost ONDS’s revenue.
- ONDS’s focus on autonomous drone platforms positions it well in a niche but growing market, potentially attracting partnerships or acquisitions from larger defense or tech firms.
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 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.
ONDS – 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 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. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.
ONDS – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#8 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 ONDS is above the price of $1.80.
Target Prices: Our first target is $2.80. If it closes above that level, the second target price is $3.80.
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 56% to 111%.
For a risk of $0.60, our first target reward is $1.00, and the second target reward is $2.00. 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. As of December 31, 2024, and December 31, 2023, ONDS had an accumulated deficit of approximately $236 million, and $198 million, respectively.
ONDS – Consolidated Statements of Operations
- To date, the company has financed its operations primarily through sales of its equity securities and debt financing. There are also concerns about share dilution from converted notes, which could dilute existing shareholders’ value if not managed carefully.
- ONDS faces potential headwinds from macroeconomic factors such as inflation, geopolitical volatility, and tariff changes, which could impact supply chains or customer budgets, especially for government contracts.
- Institutional investors may remain cautious due to ONDS’s small market cap, limited financial history, and penny stock status, leading to a bearish bias among conservative funds.
- Despite being a loss-making company, the executives are being paid significant compensation.
ONDS – 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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