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: Syros Pharmaceuticals Inc. (NASDAQ: SYRS)
Today’s penny stock pick is the biopharmaceutical company, Syros Pharmaceuticals Inc. (NASDAQ: SYRS).
Syros Pharmaceuticals Inc. focuses on the development of treatments for cancer and monogenic diseases, and building a pipeline of gene control medicines.
The company’s lead product candidates are Tamibarotene, a selective retinoic acid receptor alpha agonist, which is in Phase III clinical trial for genomically defined subset of patients with myelodysplastic syndrome and Phase II clinical trial for patients with acute myeloid leukemia; SY-2101, a novel oral form of arsenic trioxide for treating patients with acute promyelocytic leukemia; and SY-5609, a cyclin-dependent kinase 7 inhibitor, which is in a Phase I clinical trial in patients with select advanced solid tumors.
It has target discovery, research collaboration, and option agreement with Incyte Corporation to identify therapeutic targets with a focus on myeloproliferative neoplasms; and a license agreement with TMRC Co. Ltd. for the development and commercialization of tamibarotene.
Website: www.syros.com
Latest 10-k report: https://sec.report/Document/0001564590-22-010214
Analyst Consensus: As per TipRanks Analytics, based on 6 Wall Street analysts offering 12-month price targets for SYRS in the last 3 months, the stock has an average price target of $16.83, which is nearly 1291% upside from current levels.
Source: TipRanks.com
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Potential short squeeze.
- Hedge Funds Increased Holdings by 66.8K Shares Last Quarter.
Hedge Fund | 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.
SYRS – 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 RSI: The RSI is above 50 and moving higher, 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 purple color dotted line. This is a possible bullish indication.
SYRS – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, and is also moving higher from oversold levels, indicating possible bullishness.
#8 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.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for SYRS is above the price of $1.40.
Target Prices: Our first target is $2.00. If it closes above that level, the second target price is $3.20.
Stop Loss: To limit risk, place a stop loss at $1.00. Note that the stop loss is on a closing basis.
Our target potential upside is 43% to 129%.
For a risk of $0.40, our first target reward is $0.60, and the second target reward is $1.80. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. SYRS had net losses were $86.6 million, $84.0 million, and $75.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, the company had an accumulated deficit of $463.6 million.
SYRS – Consolidated Statements of Operations
- The company was formerly known as LS22, Inc. and changed its name to Syros Pharmaceuticals, Inc. in August 2012.
- Despite being a loss-making company, the executives are being paid significant compensation.
SYRS – 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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