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: Grab Holdings Limited (NASDAQ: GRAB)
Today’s penny stock pick is the Singaporean multinational technology company, Grab Holdings Limited (NASDAQ: GRAB).
Grab Holdings Limited engages in the provision of superapps in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The company offers its Grab ecosystem, a single platform with superapps for driver- and merchant-partners and consumers, that allows access to mobility, delivery, digital financial services, and enterprise sector offerings.
Website: https://www.grab.com/sg
Latest 10-k report: https://investors.grab.com/static-files/d8a49e10-c5d2-43ae-8a36-cc401923f2e7
Analyst Consensus: As per TipRanks Analytics, based on 13 Wall Street analysts offering 12-month price targets for GRAB in the last 3 months, the stock has an average price target of $4.89, which is nearly 29% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- As of late 2023, Grab reportedly serves 35 million unique users each month, according to the Business The app is being called Southeast Asia’s answer to Uber.
- Hedge Funds Increased Holdings by 38.4M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Consolidation Area: The daily chart shows that the stock has been consolidating within a price range for the past several months. This is marked in the chart as a purple color rectangle. Whenever a stock breaks out of the consolidation area, it typically moves higher.
GRAB – 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.
GRAB – 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 GRAB is above the price of $3.85.
Target Prices: Our first target is $5.60. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $2.90. Note that the stop loss is on a closing basis.
Our target potential upside is 46% to 82%.
For a risk of $0.95, our first target reward is $1.75, and the second target reward is $3.15. 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. GRAB incurred net losses of $0.5 billion, $1.7 billion, and $3.6 billion in the years ended December 31, 2023, 2022, and 2021, respectively.
GRAB – Consolidated Statements of Operations
- The company has ongoing legal proceedings. On October 3, 2019, the Malaysia Competition Commission, or MyCC, served a proposed decision against Grabcar Sdn. Bhd., MyTeksi Sdn. Bhd. and Grab Inc. for allegedly abusing Grab’s dominant position by restricting driver-partners from promoting competitors’ products and providing advertising services to third-party enterprises. MyCC imposed a proposed financial penalty of MYR 86.8 million (approximately $18.9 million). The company is also party to legal proceedings involving wrongful termination, alleged deficiency in local business taxes, personal injury matters, an alleged violation of Sections 11 and 15 of the U.S. Securities Act of 1933, Sections 10(b), 14(a), and 20(a) of the U.S. Securities Exchange Act of 1934, and Rules 10b-5 and 14a-9 p
- Corporate Insiders placed Informative Sells of Shares Worth $5.3M in the Last 3 Months.
Insiders | Source: TipRanks.com
- The company faces intense competition in each of its segments and markets.
- As of December 31, 2023, the company had total outstanding indebtedness of $0.6 billion.
- The company’s business is subject to concentration risks, as over 85% of GRAB’s revenue was derived from its deliveries and mobility segments in the year ended December 31, 2023, 2022, and 2021.
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