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: Advantage Solutions Inc. (NASDAQ: ADV)

Today’s penny stock pick is the marketing and sales services company, Advantage Solutions Inc. (NASDAQ: ADV).

Advantage Solutions Inc. provides business solutions to consumer packaged goods companies and retailers in North America, Asia Pacific, and Europe. It operates in three segments: Branded Services, Experiential Services, and Retailer Services. The company offers brokerage services to branded consumer goods manufacturers and retailers; and analytical services, such as retailer point-of-sale, primary market, and shopper research, as well as services, including selling to retailers, retail merchandising, and omni-channel marketing.

It also provides supply chain and logistics services; retailers end-to-end solutions that includes private brand strategy, merchandising, retail media, and aisle/shelf optimization; in-store merchandising or reset services; and advisory and agency services. The company was formerly known as Karman Holding Corp. and changed its name to Advantage Solutions Inc. in March 2016.

Website:  https://www.youradv.com/

Latest 10-K report:  https://d18rn0p25nwr6d.cloudfront.net/CIK-0001776661/ce9e2b7b-cfcd-44a7-a14b-6b58d71e6c0b.pdf

Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for ADV in the last 3 months, the stock has an average price target of $2.00, which is nearly 102% upside from current levels.

Analysts | Source: TipRanks.com

Potential Catalysts / Reasons for the Hype:

  • The partnership with Instacart provides CPGs with real-time shelf visibility, with a successful pilot and expansion planned for 2026.
  • The recent launch of “Advantage LiveLens” in 2026 is anticipated to offer always-on, real-time insights.
  • Hedge Funds Increased Holdings by 282.7K Shares Last Quarter.

    Hedge Funds | Source: TipRanks.com

  • The stock is viewed as undervalued by some analysts.

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

Bullish Indications

#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.

ADV – 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 50-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 looks like a good area for the stock to move higher.

ADV – Weekly Chart

#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, 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 ADV is above the price of $1.05.

Target Prices: Our first target is $1.75. If it closes above that level, the second target price is $2.20.

Stop Loss: To limit risk, place a stop loss at $0.70. Note that the stop loss is on a closing basis.

Our target potential upside is 67% to 110%.

For a risk of $0.35, our first target reward is $0.70, and the second target reward is $1.15. 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.

    ADV – Consolidated Statements of Operations

  2. The waning consumer confidence has led to a pullback in discretionary marketing budgets. The retailer inventory destocking also continues to weigh on order volumes.
  3. Trading consistently below $1.00 has triggered warnings regarding Nasdaq’s minimum bid price compliance. This may create a ‘forced selling’ bias among institutional investors who may not want to hold stocks below $1.00.
  4. The company has customer concentration risk, as the five largest clients generated approximately 21.8% of ADV’s revenues in the fiscal year ended December 31, 2024.
  5. The sales, marketing, and merchandising services industry is competitive. ADV face competition from a few other large, national, or super-regional agencies as well as many niche and regional agencies.
  6. In April 2018, ADV acquired the business of Take 5 Media Group. The company is now involved in “Take 5 Matter”, which involves legacy misconduct and ongoing federal investigations (FBI/DOJ) that expose the company to unquantifiable legal liabilities and potential client lawsuits exceeding current insurance coverage. Although Advantage won a favorable arbitration award against the former owners, the collection of these funds remains highly uncertain and provides no guaranteed financial offset to the legal risks.

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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