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: Bright Green Corporation (NASDAQ: BGXX)
Today’s penny stock pick is the cannabis products company, Bright Green Corporation (NASDAQ: BGXX).
Bright Green Corporation focuses on the propagation, cultivation, and manufacturing of cannabis products. It intends to offer cannabis products, including cannabis flower, pre-rolls, concentrates, vape pens, capsules, tinctures, edibles, topicals, and other cannabis-related products. BGXX is one of the very few companies selected by the U.S. government to grow, manufacture, and sell, legally under federal and state laws, cannabis and cannabis-related products for research, pharmaceutical applications, and affiliated export.
Website: https://www.brightgreen.us
Latest 10-k report: Annual Report Not Available
(10-Q: https://investors.brightgreen.us/node/6901/html )
Analyst Consensus: Not Covered by Wall Street Analysts.
Potential Catalysts / Reasons for the Hype:
- The company announced that it has commenced utilization of the U.S. Citizenship and Immigration Services’ (USCIS) EB-5 Program to accelerate its 2023 growth strategy and generate significant capital for use in its greenhouse construction and operations in Grants, New Mexico.
- EB-5 Program is an innovative vehicle for spurring investment and job creation in rural communities. Using the EB-5 Program, Bright Green plans to raise more than $500 million by issuing stock at a price of $39.99 per share.
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 days. This is 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 a very high volume. Once the stock breaks out of the falling wedge pattern, it could move higher.
BGXX – 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 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 bullishness.
#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.
BGXX – Weekly Chart
#7 Bullish RSI: The RSI is currently 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 BGXX is above the price of $1.55.
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 at $0.90. Note that the stop loss is on a closing basis.
Our target potential upside is 81% to 126%.
For a risk of $0.65, our first target reward is $1.25, and the second target reward is $1.95. 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 not filed its annual report.
- Since its inception, the Company has incurred net losses and funded its operations primarily through the issuance of equities, an advance from a director and since September 2022 a $3,491,057 draw on a line of credit. As per the latest 10-Q report, the company had a net loss of $5.70 million.
BGXX – Condensed Statements of Operations and Comprehensive Loss
- The company has ongoing legal proceedings, like the Bright Green Corporation v. John Fikany, State of New Mexico, County of Cibola, Thirteenth Judicial District; and Bright Green Corporation v. Jerry Capussi, State of New Mexico, County of Cibola, Thirteenth Judicial District.
- BGXX does not have any revenue, processing, or manufacturing facility.
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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