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: Babcock & Wilcox Enterprises, Inc. (NYSE: BW)
Today’s penny stock pick is the energy and environmental technology company focusing on clean power production, Babcock & Wilcox Enterprises, Inc. (NYSE: BW).
Babcock & Wilcox Enterprises, Inc. provides energy and emissions control solutions to industrial, electrical utility, municipal, and other customers in the United States, Canada, the United Kingdom, Indonesia, and Philippines. The company operates through three segments: Babcock & Wilcox Renewable; Babcock & Wilcox Environmental; and Babcock & Wilcox Thermal. The Babcock & Wilcox Renewable segment offers technologies divert the waste from landfills for power generation and replacing fossil fuels and recovering metals and reducing emissions.
It offers BrightLoop, a hydrogen generation technology that generates hydrogen from a range of fuels, including solid fuels, such as biomass and coal. This segment also provides technologies for power and heat generation comprising waste-to-energy; OxyBright, an oxygen-fired biomass-to-energy technology; and black liquor systems for the pulp and paper industry. The Babcock & Wilcox Environmental segment offers a range of emissions control and environmental technology solutions for utility, waste-to-energy, biomass-to-energy, carbon black, and industrial steam generation applications.
This segment provides systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control under the SolveBright, OxyBright, BrightLoop, and BrightGen names. The Babcock & Wilcox Thermal segment offers aftermarket parts, construction, maintenance, engineered upgrades, and field services for its installed bases, as well as the installed base of other OEMs for power generation, oil and gas, petrochemical, food processing, metals, and others. This segment also provides steam generation systems, including package boilers, watertube and firetube waste heat boilers, and other boilers to medium and heavy industrial customers.
Website: https://www.babcock.com/
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for BW in the last 3 months, the stock has an average price target of $3.25, which is nearly 46% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company reported a 31% revenue increase in Global Parts & Services for Q2 2025, driven by higher baseload generation demand from AI, data centers, and expanding economies.
- Corporate Insiders placed Informative Buys of Shares Worth $79.5K in the Last 3 Months.
Insiders | Source: TipRanks.com
- BW has tailwinds from rising global energy needs. BW’s proprietary technologies for hydrogen production and carbon capture, like BrightLoop™ technology, could attract utility or industrial clients looking to upgrading infrastructure for efficiency and regulatory compliance.
- Hedge Funds Increased Holdings by 79.1K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company recently sold Diamond Power International for $177M and used the proceeds for debt reduction.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Uptrend Channel Breakout: The daily chart shows that the stock has broken out of an uptrend channel, which is shown as purple lines. This is a possible bullish indication.
BW – 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 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.
BW – Weekly Chart
#6 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#7 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BW is above the price of $2.30.
Target Prices: Our first target is $3.00. If it closes above that level, the second target price is $3.50.
Stop Loss: To limit risk, place a stop loss at $1.90. Note that the stop loss is on a closing basis.
Our target potential upside is 30% to 52%.
For a risk of $0.40, our first target reward is $0.70, and the second target reward is $1.20. 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.
BW – Consolidated Statements of Operations
- The company has a history of near-bankruptcy and managed to survive through asset sales and capital raises. B. Riley had to lead a rescue package in 2019.
- Any slowdown in the AI/data center boom could hurt parts demand, thereby slowing business.
- On December 27, 2019, a complaint was filed against the company by Glatfelter in the United States District Court for the Middle District of Pennsylvania, Case No. 1:19-cv-02215-JPW, alleging claims of breach of contract, fraud, negligent misrepresentation, promissory estoppel, and unjust enrichment.
- BW derives substantial revenues from electric power generating companies and other steam-using industries. Demand for the company’s products and services depends on spending in these historically cyclical industries.
- BW’s revenues from sales to customers located outside of the U.S. accounted for approximately 35%, 31%, and 26% of total revenues for the years ended December 31, 2024, 2023, and 2022, respectively. Operating in international markets requires significant resources and management attention and subjects BW to political, economic, and regulatory risks that are not generally encountered in the U.S. operations.
- Despite being a loss-making company, the executives are being paid significant compensation.
BW – 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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