Analyst Thinks This $2 Stock Has 278% Upside Potential

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: SELLAS Life Sciences Group, Inc. (NASDAQ: SLS)

Today’s penny stock pick is the late-stage clinical biopharmaceutical company, SELLAS Life Sciences Group, Inc. (NASDAQ: SLS).

SELLAS Life Sciences Group, Inc. focuses on the development of novel therapeutics for various cancer indications in the United States. The company’s lead product candidate is galinpepimut-S (GPS), a peptide immunotherapy directed against the Wilms tumor 1, antigen; and SLS009 (tambiciclib), a selective small molecule cyclin-dependent kinase 9, or CDK9, inhibitor. It has a strategic collaboration with Merck & Co., Inc. to evaluate GPS as it is administered in combination with PD1 blocker pembrolizumab in a Phase 1/2 clinical trial enrolling patients in up to five cancer indications, including hematologic malignancies and solid tumors; and GenFleet Therapeutics (Shanghai), Inc. for the development and commercialization of GFH009.

Website:  https://www.sellaslifesciences.com/

Latest 10-K report:  https://d18rn0p25nwr6d.cloudfront.net/CIK-0001390478/dd866430-33a6-480c-874b-8c6d2f6d87c9.pdf

Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for SLS in the last 3 months, the stock has an average price target of $7.00, which is nearly 278% upside from current levels.

Potential Catalysts / Reasons for the Hype:

• The company’s Phase 2 SLS009 hit all endpoints (44% ORR in AML-MRC, mOS 8.9 months vs. historical 2-5).
• Corporate Insiders placed Informative Buys of Shares Worth $84.6K in the Last 3 Months.
  

  Insiders | Source: TipRanks.com

• SLS was added to the Russell 2000/3000 in June 2025, increasing visibility.
• The company has a Clinical Trial Collaboration and Supply Agreement with Merck & Co., Inc. (known as MSD outside the US and Canada). SLS is studying galinpepimut-S (GPS) in combination with Merck’s Keytruda in Patients with WT1+ Platinum-Resistant Advanced Ovarian Cancer.
• SLS Life Sciences has secured an exclusive license agreement with GenFleet Therapeutics for the development and commercialization of GFH009, now known as SLS009. This agreement grants SLS the rights to develop and commercialize SLS009 for all therapeutic and diagnostic uses worldwide outside of Greater China (mainland China, Hong Kong, Macau, and Taiwan).

On analyzing the company’s stock charts, there seem to be multiple bullish indications…

Bullish Indications

#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out a symmetrical triangle pattern, which is marked as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.

#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 MAs: The stock is currently above its 50-day and 200-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 dotted line. This looks like a good area for the stock to move higher. The stock is also trading above its 50-week SMA, indicating that the bulls are gaining control.

#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, 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 SLS is above the price of $1.88.

Target Prices: Our first target is $3.50. If it closes above that level, the second target price is $5.00.

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 86% to 166%.

For a risk of $0.98, our first target reward is $1.62, and the second target reward is $3.12. 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:

1. The company has a history of net losses. For the years ended December 31, 2024, and 2023, SLS reported a net loss of $30.9 million and $37.3 million, respectively.
   

   SLS – Consolidated Statements of Operations

2. The company has regulatory and clinical risks. The ongoing Phase 3 REGAL trial for GPS could fail to meet endpoints. Any positive data could cause the stock to surge, but delays or futility could cause it to decline. SLS009 Phase 2 success is promising, but advancing to first-line trial (Q1 2026) carries FDA approval hurdles.
3. Hedge Funds Decreased Holdings by 1.8M Shares Last Quarter.
   

   Hedge Funds | Source: TipRanks.com

4. Currently, SLS does not generate any revenues from product sales or otherwise. Even if SLS is able to successfully achieve regulatory approval for its product candidates, it is unclear when the company can generate revenues or become profitable, if at all.
5. The company may require additional capital through a variety of means, including through private and public equity offerings and debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. Raising additional capital may cause dilution to existing stockholders, restrict the company’s operations or require relinquishing rights to product candidates on unfavorable terms.
6. Despite being a loss-making company, the executives are being paid significant compensation.
   

   SLS – 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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