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: Blink Charging Co. (NASDAQ: BLNK)
Today’s penny stock pick is the company that engages in the operation and provision of electric vehicles, charging equipment, and networked EV charging services, Blink Charging Co. (NASDAQ: BLNK).
Blink Charging Co. owns, operates, manufactures, and provides electric vehicle (EV) charging equipment and networked EV charging services in the United States and internationally. The company offers residential and commercial EV charging equipment that enables EV drivers to recharge at various location types.
It also provides Blink Network, a cloud-based system that operates, maintains, and manages various Blink charging stations and associated charging data, back-end operations, and payment processing, as well as offers property owners, managers, parking companies, and state and municipal entities with cloud-based services that enable the remote monitoring and management of EV charging stations; and EV drivers with station information, including station location, availability, and applicable fees. In addition, the company offers EV charging hardware, software services, and service plans.
It has strategic partnerships across transit/destination locations, including airports, auto dealers, healthcare/medicals, hotels, mixed-use and municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations. The company offers its services through direct sales force and resellers, as well as sells residential Level 2 chargers through various internet channels.
Website: https://www.blinkcharging.com
Latest 10-k report: https://ir.blinkcharging.com/sec-filings/all-sec-filings/content/0001493152-23-007639/form10-k.htm
Analyst Consensus: As per TipRanks Analytics, based on 7 Wall Street analysts offering 12-month price targets for BLNK in the last 3 months, the stock has an average price target of $7.86, which is nearly 129% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company recently released a strong earnings report for the third quarter of 2023.
- The stock is significantly oversold and has a considerable short interest of more than 27%, according to MarketBeat data.
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.
BLNK – 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 looks like a good area for the stock to move higher.
BLNK – 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 BLNK is above the price of $3.50.
Target Prices: Our first target is $5.50. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $2.30. Note that the stop loss is on a closing basis.
Our target potential upside is 57% to 100%.
For a risk of $1.20, our first target reward is $2.00, and the second target reward is $3.50. 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:
- The company has a history of net losses. BLNK incurred net losses of $91.6 million, $55.1 million, and $17.8 million for the years ended December 31, 2022, 2021, and 2020, respectively.
BLNK – Consolidated Statements of Comprehensive Loss
- The company has multiple ongoing legal proceedings. On August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas, and Michael Rama. On September 15, 2020, a shareholder derivative lawsuit, captioned Klein v. Farkas et al., Case No. 20- 19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s Board of Directors and Michael Rama. On December 23, 2020, another shareholder derivative action, captioned Bhatia v. Farkas et al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court. On February 7, 2022, another shareholder derivative lawsuit, captioned McCauley v. Farkas et al., Case No. A-22-847894-C, was filed in the Eighth Judicial District Court in Clark County, Nevada.
- BLNK has a customer concentration risk. During the year ended December 31, 2021, sales to a significant customer represented 12% of total revenue. During the year ended December 31, 2020, sales to a significant customer represented 25% of total revenue.
- Despite being a loss-making company, the executives are being paid millions as compensation.
BLNK – Executive Compensation
- Hedge Funds Decreased Holdings by 200.0K Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- Corporate Insiders placed Informative Sells of Shares Worth $56.2M in the Last 3 Months.
Insiders | Source: TipRanks.com
- The company has significant competition from the likes of ChargePoint, EVgo, Plug Power, Blink, Wallbox, Allego, Beam, Enphase, and Tesla.
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