Analyst Thinks This $1 Stock Has 440% Upside Potential

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: Sequans Communications S.A. (NYSE: SQNS)

Today’s penny stock pick is the fabless semiconductor company specializing in 4G/5G chips, Sequans Communications S.A. (NYSE: SQNS).

Sequans Communications S.A. engages in the fabless designing, developing, and supplying of cellular semiconductor solutions for massive and broadband internet of things markets. It offers baseband solutions for use in encoding and decoding data based on 4G and 5G protocols for wireless processing platform for a cellular device; RF transceivers used to transmit and receive wireless transmissions; highly integrated system-on-chip solutions that combine various functions into a single die or package; and LTE modules.

The company also provides software, including tools to enable manufacturers to integrate solutions into their devices; and design support services. It serves OEMs and ODMs customers, as well as 4G and 5G wireless carriers.

Website:  https://www.sequans.com/

Latest 10-k report:  https://www.sec.gov/Archives/edgar/data/1383395/000138339525000018/0001383395-25-000018-index.htm

Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for SQNS in the last 3 months, the stock has an average price target of $7.50, which is nearly 500% upside from current levels.

Potential Catalysts / Reasons for the Hype:

• The company is seeing increased demand in the IoT market and is actively developing new products, including the Iris RF transceiver for software-defined radio (SDR) and 5G RedCap chips.
• SQNS has Partnerships with leaders like Itron, AT&T, Geotab, and Soracom, accelerating adoption.
• The company’s corporate Bitcoin adoption trend, boosting visibility.

On analyzing the company’s stock charts, there seem to be multiple bullish indications…

Bullish Indications

#1 Symmetrical Triangle Pattern: The daily chart shows that the stock has been forming 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.

#2 Bullish RSI: The RSI is moving higher from oversold levels, indicating possible bullishness.

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

#4 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.

#5 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.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, the ideal buy level for SQNS is above the price of $1.50.

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 $0.80. Note that the stop loss is on a closing basis.

Our target potential upside is 87% to 153%.

For a risk of $0.70, our first target reward is $1.30, and the second target reward is $2.30. 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.
   

   SQNS – Consolidated Statements of Income and Loss

2. SQNS faces intense competition in IoT semiconductors.
3. The company has dependency on volatile Bitcoin prices for treasury value.
4. Hedge Funds Decreased Holdings by 108.1K Shares Last Quarter.
   

   Hedge Funds | Source: TipRanks.com

5. SQNS has dilution risks from recent $384M raise (up to 7B new shares approved) and Form S-8 filing for 13.26M shares under incentive plans.
6. The company was issued NYSE non-compliance notices for share price and market cap in June 2025.
7. SQNS has customer concentration risk as it depends on a small number of customers for a significant portion of the revenue. The company’s top ten customers accounted for 95%, 92% and 97% of total revenue in 2022, 2023, and 2024, respectively.

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.

Where to Invest $99 [sponsor]
Motley Fool Stock Advisor's average stock pick is up over 350%*, beating the market by an incredible 4-1 margin. Here’s what you get if you join up with us today: Two new stock recommendations each month. A short list of Best Buys Now. Stocks we feel present the most timely buying opportunity, so you know what to focus on today. There's so much more, including a membership-fee-back guarantee. New members can join today for only $99/year.