Trade This $4 Stock for a 24% Potential Upside

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: Newell Brands Inc. (NASDAQ: NWL)

Today’s penny stock pick is the parent company of brands like Sharpie, Yankee Candle, Rubbermaid, and others, Newell Brands Inc. (NASDAQ: NWL).

Newell Brands Inc. engages in the design, manufacture, sourcing, and distribution of consumer and commercial products worldwide. The company operates in three segments: Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation.

The Commercial Solutions segment provides commercial cleaning and maintenance solution products under the Rubbermaid, Rubbermaid Commercial Products, Mapa, and Spontex brands; closet and garage organization products; hygiene systems and material handling solutions; household products, such as kitchen appliances under the Crockpot, Mr. Coffee, Oster, and Sunbeam brands; small appliances under the Breville brand name in Europe; food and home storage products under the FoodSaver, Rubbermaid, Ball, and Sistema brands; fresh preserving products; vacuum sealing products; and gourmet cookware, bakeware, and cutlery under the Calphalon brand; and home fragrance products under the WoodWick and Yankee Candle brands.

The Learning and Development segment offers writing instruments, including markers and highlighters, pens, and pencils; art products; activity-based products; labeling solutions; and baby gear and infant care products under the Dymo, Elmer’s, EXPO, Graco, NUK, Paper Mate, Parker, and Sharpie brands. The Outdoor and Recreation segment provides outdoor and outdoor-related products, including technical apparel and on-the-go beverageware under the Campingaz, Coleman, Contigo, and Marmot brands.

It serves warehouse clubs, department and drug/grocery stores, mass merchants, home centers, commercial products distributors, specialty retailers, office superstores and supply stores, contract stationers, e-commerce retailers, and sporting goods, as well as direct to consumers online, select contract customers, and other professional customers.

Website:  https://www.newellbrands.com/

Latest 10-K report:  https://ir.newellbrands.com/static-files/43ff083b-3e55-415b-b012-63cd014d5e98

Analyst Consensus: As per TipRanks Analytics, based on 9 Wall Street analysts offering 12-month price targets for NWL in the last 3 months, the stock has an average price target of $4.78, which is nearly 25% upside from current levels.

Potential Catalysts / Reasons for the Hype:

• The company recently announced a global productivity plan, including cutting ~10% of its professional/clerical workforce (about 900 jobs) and closing ~20 Yankee Candle stores. This is expected to generate $110 million+ in annual pre-tax savings starting in 2026, strengthening competitiveness and cash flow.
• S. onshoring for Sharpie production has made operations cheaper, faster, and more efficient without job cuts or price hikes.
• Management is optimistic about 2026 innovation pushes and stronger operating cash flow.

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

Bullish Indications

#1 Symmetrical Triangle Pattern: The daily chart shows that the stock has currently formed a symmetrical triangle pattern, which is marked as purple color 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 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.

#4 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.

#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart and is also moving higher from oversold levels, 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 NWL is above the price of $4.00.

Target Prices: Our first target is $5.20. If it closes above that level, the second target price is $6.20.

Stop Loss: To limit risk, place a stop loss at $3.30. Note that the stop loss is on a closing basis.

Our target potential upside is 30% to 55%.

For a risk of $0.70, our first target reward is $1.20, and the second target reward is $2.20. 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.
   

   NWL – Consolidated Statements of Operations

2. The tariffs are a major headwind, projected to cost ~$180 million in 2025, leading to price increases that have hurt sales volumes.
3. Hedge Funds Decreased Holdings by 1.2M Shares Last Quarter.
   

   Hedge Funds | Source: TipRanks.com

4. Broader economic pressures, including inflation and competitive retail environments, have contributed to rising costs.
5. Despite being a loss-making company, the executives are being paid significant compensation.
   

   NWL – 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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