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: Apexigen, Inc. (NASDAQ: APGN)
Today’s penny stock pick is the clinical-stage biopharmaceutical company, Apexigen, Inc. (NASDAQ: APGN).
Apexigen, Inc. discovers and develops antibody therapeutics for oncology. It develops a pipeline of product candidates, including APX005M, a humanized agonist antibody that is in Phase II clinical development for the treatment of solid tumors, such as melanoma, esophageal and gastroesophageal junction, sarcoma, and rectal and ovarian cancers in combination with immunotherapy, chemotherapy, radiation therapy, and cancer vaccines; and APX601, a humanized antagonist antibody that is in Phase I/II clinical trial for the treatment of multiple tumor indications, as well as APX801, an NK cell engager to activate natural killer cells to killing of tumor cells.
Website: https://www.apexigen.com
Latest 10-k report: https://ir.apexigen.com/sec-filings/sec-filing/10-k/0001193125-22-099020
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for APGN in the last 3 months, the stock has an average price target of $13.00, which is nearly 622% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- An analyst with EF Hutton Acquisition started coverage of APGN stock with a “buy” rating and set a price target of $8 per share.
- Hedge Funds Increased Holdings by 15.0K Shares Last Quarter.
Hedge Funds | 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 weeks. 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 with historic high volume. Once a stock breaks out of the falling wedge pattern, it could move higher.
APGN – 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 looks like a good area for the stock to move higher.
APGN – 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 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 APGN is above the price of $1.90.
Target Prices: Our first target is $3.00. If it closes above that level, the second target price is $4.00.
Stop Loss: To limit risk, place a stop loss at $1.20. Note that the stop loss is on a closing basis.
Our target potential upside is 58% to 111%.
For a risk of $0.70, our first target reward is $1.10, and the second target reward is $2.10. 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.
APGN – Consolidated Statements of Operations
- As of December 31, 2021, the company had approximately $217,409 of cash and a working capital of approximately $125,447. The lack of significant capital raises substantial doubt about APGN’s ability to continue as a going concern.
- Lincoln Park Capital had committed to purchase up to $50 million of common stock. This $50 million committed equity line may cause dilutions in the future.
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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