Trade This $2 Stock for a 65% Potential Return

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: Largo Inc. (NASDAQ: LGO)

Today’s penny stock pick is the primary vanadium producer, Largo Inc. (NASDAQ: LGO).

Largo Inc. engages in the development and sale of vanadium-based energy storage systems in Canada. The company operates through six segments: Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Clean Energy and Largo Physical Vanadium.

Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy storage solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021.

Website:  https://www.largoinc.com/

Latest 10-K report:  https://s3.amazonaws.com/sec.irpass.cc/3090/0001062993-25-006517.pdf

Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for LGO in the last 3 months, the stock has an average price target of $3.10, which is nearly 66% upside from current levels.

Analysts | Source: TipRanks.com

Potential Catalysts / Reasons for the Hype:

• There is an increase in Vanadium demand tied to steel alloys and potential growth in redox flow batteries for energy storage. Any vanadium price rebound or clean energy policy support could amplify gains.
• Corporate Insiders placed Informative Buys of Shares Worth $38.4K in the Last 3 Months.
  

  Insiders | Source: TipRanks.com

• Recent deals, like a US$56M iron ore calcine sale (with payments ongoing) and a US$60M ATM equity program could help address the need for working capital.
• New metallurgical tests show high-grade copper (18.4% Cu) and significant gold, platinum, and palladium mineralization at its Maracás Menchen Mine. This could transform LGO from a niche miner to a multi-commodity player.
• The company’s 2026 guidance points to a 51.7% increase in vanadium equivalent production for the first half of the year compared to 2025, driven by improved ore availability and plant upgrades.

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 of 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.

LGO – 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 MAs: The stock is currently above its 50-day as well as 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.

LGO – Weekly Chart

#6 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.

Recommended Trade (based on the charts)

Buy Levels: If you want to get in on this trade, the ideal buy level for LGO is above the price of $2.00.

Target Prices: Our first target is $3.50. If it closes above that level, the second target price is $4.50.

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 75% to 125%.

For a risk of $0.80, our first target reward is $1.50, and the second target reward is $2.50. 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.
   

   LGO – Consolidated Statements of Operation

2. The company’s financial performance is highly dependent on the market price of V2O5, which accounted for 58.6% of LGO’s gross revenue in 2024, and FeV, which accounted for 41.4% of gross revenue in 2024. For the year ended December 31, 2024, revenues from the sales of vanadium products accounted for 94.9% of the company’s total revenues.
3. The company recently launched a $60 million At-The-Market (ATM) equity offering. This is a double-edged sword: it provides necessary working capital but risks diluting existing shareholders significantly if used aggressively.
4. The company has significant debt. As of December 31, 2024, LGO has a total debt of approximately $92,280,000, and lease liabilities of approximately $1,525,000.
5. Largo recently suspended its ilmenite production guidance for 2026 as it evaluates repurposing that infrastructure for copper and platinum group metals (PGM), creating near-term uncertainty for that revenue stream.
6. There is a tariff pressure on company. U.S. tariffs on high-purity vanadium forced the company to halt that specific production line in late 2025, impacting margins.
7. Despite being a loss-making company, the executives are being paid significant compensation.
   

   LGO – 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.