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: Energy Vault Holdings, Inc. (NYSE: NRGV)
Today’s penny stock pick is the energy storage solutions company, Energy Vault Holdings, Inc. (NYSE: NRGV).
Energy Vault Holdings, Inc. develops and sells energy storage solutions. The company offers battery energy storage systems for shorter-duration energy storage needs; gravity energy storage systems, including EVx solution; green hydrogen energy storage systems; hybrid energy storage systems; and energy management software platform that orchestrates the management of one or more diverse storage mediums. Its solutions allow utilities, independent power producers, and large energy users to manage their power portfolios and efficiently dispatch power.
Website: https://www.energyvault.com
Latest 10-k report: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001828536/aff4f809-8d50-4dd3-80d8-7021f1f3b90a.pdf
Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for NRGV in the last 3 months, the stock has an average price target of $6.00, which is nearly 105% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- Corporate Insiders placed Informative Buys of Shares Worth $148.2K in the Last 3 Months.
Insiders | Source: TipRanks.com
- Hedge Funds Increased Holdings by 413.0K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The company announced that five new EVx™ gravity energy storage systems (GESS) will be deployed by China Tianying Inc. under the Company’s previously announced licensing and royalty agreement with Atlas Renewable, which includes a 5% project revenue royalty associated with each project.
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 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.
NRGV – 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 SMA 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 color 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.
NRGV – Weekly Chart
#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 NRGV is above the price of $3.50.
Target Prices: Our first target is $5.00. If it closes above that level, the second target price is $6.40.
Stop Loss: To limit risk, place a stop loss at $2.60. Note that the stop loss is on a closing basis.
Our target potential upside is 43% to 83%.
For a risk of $0.90, our first target reward is $1.50, and the second target reward is $2.90. 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.
NRGV – Consolidated Statements of Operations_
- The company has been and continues to be involved in legal proceedings, administrative proceedings, claims, and other litigation. These could subject NRGV to significant fines, penalties, judgments, remediation costs, negative publicity and requirements resulting in increased expenses.
- NRGV has a limited operating history. From the company’s inception in October 2017, it has built only one GESS to date, the EV1 Tower in Lugano, Switzerland which was decommissioned in September 2022. The company has not fully deployed any other systems as of 2023.
- Despite being a loss-making company, the executives are being paid significant compensation.
NRGV – Executive Compensation
- The company has customer concentration risk. NRGV depends on a limited number of customers for the majority of its revenue, and the loss of any one of these customers could substantially reduce its revenue and impact liquidity.
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.
Source: Trades of the Day