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: Marpai, Inc. (NASDAQ: MRAI)
Today’s penny stock pick is the technology-driven healthcare payer, Marpai, Inc. (NASDAQ: MRAI).
Marpai, Inc. focuses on providing services to the self-insured employer market in the United States and Israel. The company offers ancillary services, such as care management, case management, actuarial services, health savings account administration, bill review, and cost containment services. It also develops artificial intelligence and healthcare technology.
Website: https://www.marpaihealth.com
Latest 10-k report: https://ir.marpaihealth.com/financial-info/all-sec-filings/content/0000950170-23-010614/0000950170-23-010614.pdf
Analyst Consensus: Not Covered By Wall Street Analysts
Potential Catalysts / Reasons for the Hype:
- The company revealed a new client agreement labeled “Off-Cycle”.
- Corporate Insiders placed Informative Buys of Shares Worth $1.6M in the Last 3 Months.
Insiders | Source: TipRanks.com
- Marpai, Inc. recently released an impressive preliminary Q4 net revenue figure for March 6, 2024. The company reported a significant increase in net revenues, totaling around $8.7 million for Q4 2023. This marks a notable 14% growth compared to the same quarter in 2022.
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.
MRAI – 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 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.
MRAI – Weekly Chart
#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
#7 MACD above Signal Line: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for MRAI is above the price of $2.05.
Target Prices: Our first target is $3.00. If it closes above that level, the second target price is $3.50.
Stop Loss: To limit risk, place a stop loss at $1.55. Note that the stop loss is on a closing basis.
Our target potential upside is 46% to 71%.
For a risk of $0.50, our first target reward is $0.95, and the second target reward is $1.45. 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. As of December 31, 2022, MRAI’s accumulated deficit is $48.0 million.
MRAI – Consolidated Statements of Operations
- On January 11, 2023, MRAI received a written notification from the Listing Qualifications Department of the Nasdaq Stock Market LLC notifying that the company was not in compliance with the minimum bid price requirement for continued listing on Nasdaq, as set forth under Nasdaq Listing Rule 5550(a)(2) because the closing bid price of Common Stock was below $1.00 per share for the previous thirty (30) consecutive business days.
- The company has ongoing legal proceedings. By letter dated September 3, 2020, the CMS notified Marpai Administrators of a complaint alleging that Marpai Administrators uses a clearinghouse (“Zelis”) that charges a percentage-based fee for Electronic Funds Transfer transactions, which potentially violates HIPAA, 45 CFR 162.923(a).
- Despite being a loss-making company, the executives are being paid significant compensation.
MRAI – Executive Compensation
- The company has customer concentration risk. Marpai Administrators’ largest two Clients collectively represented approximately 12.1% and 8.0% of its total gross revenue in 2021 and 2022 respectively. Moreover, Marpai Administrators has a high annual customer attrition rate historically. If the high customer attrition rate continues, the company’s future revenue growth will suffer and operating results will be negatively impacted, and MRAI may encounter difficulty in recruiting new clients due to erosion of customer confidence.
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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Source: Trades of the Day