We recently started a series called “Penny Stock of the Day”. These ideas are geared for 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: OpGen Inc. (NASDAQ: OPGN)
Today’s penny stock pick is the precision medicine company, OpGen Inc. (NASDAQ: OPGN).
OpGen Inc. engages in developing molecular information products and services. The company utilizes molecular diagnostics and informatics to help combat infectious diseases. It also helps clinicians with information about life threatening infections, enhances patient outcomes, and decreases the spread of infections caused by multidrug-resistant microorganisms.
The company’s products include Acuitas AMR Gene Panel, a vitro diagnostic test for the detection and identification of various bacterial nucleic acids and genetic determinants of antimicrobial resistance (AMR) from bacterial colonies isolated from any specimen; and QuickFISH and PNA FISH diagnostic test products for the identification of various infectious pathogens, as well as SARS CoV-2 test kits.
Website: www.opgen.com
Latest 10-k report: https://sec.report/Document/0001079973-21-000195/
Analyst Consensus: As per TipRanks analytics, OpGen’s average price target is $4.00 based on 1 Wall Street analyst offering 12 month price targets in the last 3 months.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The anticipation of approval of FDA’s review of the Acuitas AMR Gene Panel 510(k) submission.
- OPGN winning the Chinese NMPA Approval for the Curetis Unyvero System. If other elements are approved it will trigger an eight-year deal with partner Beijing Clear Biotech worth €150m.
- Analysts rating the stock as Buy with price targets that have significant upside.
Recent Analyst Ratings | Source: TipRanks.com
- The decent pipeline and collaborations of OpGen Group Company Ares Genetics, making it a sleeping giant. Collaborations include UPMC, large US-based VRO Lab, and Qiagen, while Sandoz collaboration was extended.
- Positive insider sentiment, with Corporate Insiders buying shares worth $90.2K in the last 3 months.
- Rumors of a possible buyout.
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 of a Symmetrical Triangle pattern. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as orange color lines. Once a stock breaks out from a symmetrical triangle pattern, it usually moves higher.
OPGN – 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 has moved higher from below the +DI and -DI lines.
#3 Price above MAs: The stock is currently above the 50-day as well as 200-day SMA, indicating that the bulls are currently in 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 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates possible bullishness.
#6 Above Support Area: The weekly chart shows that the stock had bounced back higher after taking support at a long-term support level. This is marked as a pink color dotted line. The stock is also trading above its 50-week SMA. All these are possible bullish signs.
OPGN – Weekly Chart
#7 Bullish Aroon: In the weekly chart as well, the value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30, 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 OPGN is above yesterday’s high, which translates to a price of $3.03.
Target Prices: Our target prices are $3.50 and $5.00.
Stop Loss: To limit risk, place a stop loss below $2.77. Note that the stop loss is on a closing basis.
Our target potential upside is 16% to 65%.
For a risk of $0.26, our first target reward is $0.47, and the second target reward is $1.97. This is a nearly 1:2 and 1:8 risk-reward trade.
In other words, this trade offers 2x to 8x more potential upside than downside.
Potential Risks / Red Flags:
- The company has incurred substantial losses since its inception and is expected to continue to incur additional losses for the next several years, as per its latest 10-k report. For the years ended December 31, 2020, and 2019, OPGN had net losses of $26.2 million and $12.4 million, respectively. From its inception through December 31, 2020, the company had an accumulated deficit of $200.7 million.
OPGN – Annual Report – Consolidated Statements of Operations and Comprehensive Loss
- The reports of the company’s independent registered public accounting firm on OPGN’s financial statements for the years ended December 31, 2020, and 2019 each contain explanatory language that substantial doubt exists about the company’s ability to continue as a going concern.
- As per the latest quarterly report, the company had a net loss of $7.1 million.
OPGN – Q2 Report – Consolidated Statements of Operations and Comprehensive Loss
- Despite being a loss-making company, the company executives are drawing significant compensation.
OPGN – Executive Compensation
- The current surge is buoyed by the expectation of the Acuitas FDA clearance. In case it fails to do so, the stock would have a significant downmove. However, if approved, the stock is expected to have a significant upmove, and even reach double digits.
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.
This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.