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: BioCardia Inc. (NASDAQ: BCDA)
Today’s penny stock pick is the clinical-stage regenerative medicine company, BioCardia Inc. (NASDAQ: BCDA).
BioCardia Inc. develops therapeutics for cardiovascular diseases. Its lead therapeutic candidate is the CardiAMP Cell Therapy System for the treatment of heart failure and chronic myocardial ischemia; and ALLOGENEIC cell therapy for cardiac and pulmonary disease. The company is also developing ALLOGENEIC Cell Therapy System, an investigational culture expanded bone marrow derived mesenchymal cell therapy, which is in Phase I/II trial for the treatment of ischemic systolic heart failure. In addition, it offers the Helix biotherapeutic delivery system, a percutaneous catheter delivery system for cardiovascular regenerative medicine; and Morph deflectable guides and sheaths.
Website: www.biocardia.com
Latest 10-k report: https://sec.report/Document/0001437749-21-007543/
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for BCDA in the last 3 months, the stock has an average price target of $6.50, which is nearly 225% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The grant of Breakthrough Device Designation by the FDA to the company’s lead candidate CardiAMP Cell Therapy System. It is considered to be the pioneer receiver of cardiac cell therapy by FDA.
- Corporate Insiders Bought Shares Worth $11.0K in the Last 3 Months.
Insiders | Source: TipRanks.com
- C. Wainwright analyst reiterated a buy rating and $9 price target for the stock.
Analyst Forecasts | Source: TipRanks.com
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.
BCDA – 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 Bullish Stoch: The %K line of the stochastic is above the %D line, indicating possible bullishness.
#5 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.
#6 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 is a possible bullish indication.
BCDA – Weekly Chart
#7 Bullish RSI: The RSI had moved higher from oversold levels and is currently nearing 50, indicating possible bullishness.
#8 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, 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 BCDA is above the price of $2.10.
Target Prices: Our first target is $2.80. If it closes above that level, the second target price is $3.50.
Stop Loss: To limit risk, place a stop loss below $1.70. Note that the stop loss is on a closing basis.
Our target potential upside is 33% to 67%.
For a risk of $0.40, our first target reward is $0.70, and the second target reward is $1.40. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has incurred net losses since its inception. BCDA’s net loss for the year ended December 31, 2020, was $15.0 million and the accumulated deficit totaled $116.1 million as of December 31, 2020.
BCDA – Consolidated Statements of Operations
- The company has three legal proceedings currently pending in Federal Court in San Francisco.
- Despite being a loss-making company, the executives are being paid significant compensation.
BCDA – Executive Compensation
- Even if the company obtains regulatory approval for a product candidate, including its CardiAMP and CardiALLO Cell Therapy Systems and other therapeutic candidates, they will be subject to ongoing regulatory scrutiny.
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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