Analysts Think This $3 Stock Has 39% Upside Potential

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: HIVE Digital Technologies Ltd. (NASDAQ: HIVE)

Today’s penny stock pick is the cryptocurrency mining firm, HIVE Digital Technologies Ltd. (NASDAQ: HIVE).

HIVE Digital Technologies Ltd. engages in the mining and sale of digital currencies in Canada, Sweden, and Iceland. The company operates data centers for computing and mining cryptocurrencies, including Bitcoin and other coins. It also provides infrastructure solutions, as well as computational capacity to distributed networks in the blockchain industry. The company was formerly known as HIVE Blockchain Technologies Ltd. and changed its name to HIVE Digital Technologies Ltd. in July 2023.

Website:  https://hivedigitaltechnologies.com

Latest 10-k report:  https://www.sec.gov/Archives/edgar/data/1720424/000106299324012996/0001062993-24-012996-index.htm

Analyst Consensus: As per TipRanks Analytics, based on 2 Wall Street analysts offering 12-month price targets for HIVE in the last 3 months, the stock has an average price target of $4.75, which is nearly 39% upside from current levels.

Potential Catalysts / Reasons for the Hype:

• The company reported a positive unaudited production figure for June 2024. In June the Company mined 119 Bitcoin, increasing its Bitcoin holdings by 2%, now totalling 2,496 Bitcoin on the balance sheet.

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.

#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 Bullish Stoch:  The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.

#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.

#6 MACD above Signal Line: In the weekly chart, 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 HIVE is above the price of $3.45.

Target Prices: Our first target is $5.00. If it closes above that level, the second target price is $6.00.

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 45% to 74%.

For a risk of $0.85, our first target reward is $1.55, and the second target reward is $2.55. 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.
   

   HIVE – Consolidated Statements of Operations

2. The Company’s wholly owned subsidiaries located in Sweden (Bikupa Datacenter AB (Bikupa) and Bikupa Datacenter 2 AB (Bikupa 2) received decision notice of assessments on December 28, 2022, December 21, 2023, and December 22, 2023 for Bikupa and February 14, 2023, and December 21, 2023 for Bikupa 2 respectively, from the Swedish Tax Authority in connection with the application of VAT and its ability to recover input VAT against certain equipment and other charges in a total amount of SEK 411.9 million or approximately $40.9 million.
3. Corporate Insiders placed Informative Sells of Shares Worth $36.1K in the Last 3 Months.
   

   Insiders | Source: TipRanks.com

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