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: Clene Inc. (NASDAQ: CLNN)
Today’s penny stock pick is the clinical-stage pharmaceutical company, Clene Inc. (NASDAQ: CLNN).
Clene Inc. focuses on the discovery, development, and commercialization of novel clean-surfaced nanotechnology (CSN) therapeutics. Its lead drug is CNM-Au8, which is being studied in various clinical trials, including a Phase 2/3 registrational clinical trial for patients with amyotrophic lateral sclerosis (ALS); completed Phase 2 proof of concept clinical trial in patients with early symptomatic ALS; completed two open-label investigator blinded Phase 2 clinical trials on the brain’s energy metabolites; ongoing Phase 2 clinical trial for the treatment of visual pathway deficits in chronic optic neuropathy for remyelination in stable relapsing Multiple Sclerosis; and a planned Phase 2 clinical trial for the treatment of patients with Parkinson’s Diseases.
The company’s products also include CNM-AgZn17, a gel polymer suspension of silver and zinc ions that is being developed for the treatment of infectious diseases and to accelerate wound healing; CNM-ZnAg, a broad-spectrum antiviral and antibacterial agent to treat infection disease, such as COVID-19 and to provide immune support for symptom resolution; and CNM-PtAu7, a gold-platinum CSN therapeutic for oncology applications. It also markets and distributes dietary supplements comprising rMetx, an aqueous zinc-silver ion dietary supplement; and KHC46, an aqueous gold dietary supplement of very low-concentration Au nanoparticles.
Website: https://clene.com
Latest 10-k report: https://sec.report/Document/0000950170-22-003410
Analyst Consensus: As per TipRanks Analytics, based on 5 Wall Street analysts offering 12-month price targets for CLNN in the last 3 months, the stock has an average price target of $12.40, which is nearly 300% upside from current levels.
Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company is expected to release four study results (ZnAg, Repair-MS, Visionary-MS, and HEALEY ALS Platform Trial – Regimen C CNM-Au8) by December 2022. Clene is anticipating the potential commercialization of CNM-Au8 as a treatment for amyotrophic lateral sclerosis (ALS).
- Maryland Board of Public Works finalized a $3 million loan facility for CLNN, indicating confidence in the company.
- Corporate Insiders Bought Shares Worth $1.1M in the Last 3 Months.
Insiders | Source: TipRanks.com
- Multiple analysts reaffirmed their STRONG BUY rating. Oppenheimer predicted an Earnings Per Share for $CLNN to be $18.23 for the entire year of 2026.
Analysts | 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.
CLNN – 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, and has also moved higher from oversold levels, 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.
CLNN – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 MACD above Signal Line: In the weekly chart, 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 CLNN is above the price of $3.70.
Target Prices: Our first target is $4.70. If it closes above that level, the second target price is $5.70.
Stop Loss: To limit risk, place a stop loss at $3.10. Note that the stop loss is on a closing basis.
Our target potential upside is 27% to 54%.
For a risk of $0.60, our first target reward is $1.00, and the second target reward is $2.00. 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. CLNN recorded a net loss of $9.7 million and $19.3 million for the years ended December 31, 2021, and 2020, respectively. As of December 31, 2021, the company had an accumulated deficit of $163.3 million.
CLNN – Consolidated Statements of Operations and Comprehensive Loss – 10K
- Despite being a loss-making company, the executives are being paid significant compensation.
CLNN – Executive Compensation
- The company reported a net loss of $13.4 million for the three months ended March 31, 2022, in its latest 10-Q report.
CLNN – Consolidated Statements of Operations and Comprehensive Loss – 10Q
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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