We recently started a series called “Penny Stock of the Day”. These ideas are geared toward 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: FiscalNote Holdings, Inc. (NYSE: NOTE)
Today’s penny stock pick is the technology company, FiscalNote Holdings, Inc. (NYSE: NOTE).
FiscalNote Holdings, Inc. operates as a technology company in North America, Europe, Australia, and Asia. It combines artificial intelligence technology, machine learning, and other technologies with analytics, workflow tools, and expert research. The company also delivers that intelligence through its suite of public policy and issues management products, as well as powerful tools to manage workflows, advocacy campaigns, and constituent relationships. It serves a customer base that includes businesses comprising the Fortune 100 companies, government agencies, law firms, professional services organizations, trade groups, and non-profits.
Website: https://fiscalnote.com/
Latest 10-k report: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001823466/78c2fb33-8ea7-454a-aa8e-3b56e37b91b9.pdf
Analyst Consensus: As per TipRanks Analytics, based on 4 Wall Street analysts offering 12-month price targets for NOTE in the last 3 months, the stock has an average price target of $3.31, which is nearly 188% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company recently reported Q3 2024 total revenues of $29.4 million and adjusted EBITDA of $3.4 million, both exceeding the previously provided forecast.
- Hedge Funds Increased Holdings by 777.3K 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 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.
NOTE – 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 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.
NOTE – Weekly Chart
#6 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 NOTE is above the price of $1.20.
Target Prices: Our first target is $1.80. If it closes above that level, the second target price is $2.20.
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 50% to 83%.
For a risk of $0.30, our first target reward is $0.60, and the second target reward is $1.00. 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. NOTE reported net losses of $115.5 million and $218.3 million for the years ended December 31, 2023 and 2022, respectively.
NOTE – Consolidated Statement of Operations
- The company recently received notification from the NYSE that it no longer complies with the continued listing standard requiring a minimum average closing share price of $1.00 over a 30-day trading period.
- The company issued subordinated convertible notes with an aggregate principal amount of approximately $6.3 million in connection with the Company’s strategic commercial partnership with Era Global Technologies, LLC. The Era Convertible Notes are convertible into shares of the company’s Class A Common Stock. Sales of a substantial number of the Class A Common Stock into the public market or the perception that such sales might occur could cause the market price of Class A Common Stock to decline. Additionally, the issuance of additional shares of Class A Common Stock will dilute other stockholders.
- Approximately 90% of NOTE’s revenues are subscription-based. The company is dependent on a significant number of its customers renewing their arrangements.
- Despite being a loss-making company, the executives are being paid significant compensation.
NOTE – 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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