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 company, Energy Vault Holdings, Inc. (NYSE: NRGV).
Energy Vault Holdings, Inc. develops and deploys utility-scale energy storage solutions in United States, Australia, and internationally. The company offers B-Vault, an electrochemical battery energy storage solution for short-duration energy storage needs; B-Nest, a structure designed to house batteries for onsite energy storage serving space-constrained project sites; G-Vault, a gravity energy storage solution for long-duration energy storage needs; and H-Vault, a hydrogen or hybrid energy storage solution.
It also provides software solutions, such as Vault-OS Energy Management System that manages one or more energy storage mediums and the underlying generation assets; Vault-Bidder, which utilizes machine learning algorithms to match node-specific data with real-time weather and asset performance information; and Vault-Manager, which safeguards asset management and to help blend developing technologies.
Website: https://www.energyvault.com/
Latest 10-K report: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001828536/a34eebb4-e404-4aef-a9ba-353c5536c5ab.pdf
Analyst Consensus: As per TipRanks Analytics, based on 3 Wall Street analysts offering 12-month price targets for NRGV in the last 3 months, the stock has an average price target of $3.73.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The company is poised to take advantage of the explosive growth in energy storage for AI/data centers and renewables, especially NRGV’s gravity (G-VAULT), battery (B-VAULT), and asset management (Asset Vault) tech.
- Corporate Insiders placed Informative Buys of Shares Worth $213.3K in the Last 3 Months.
Insiders | Source: TipRanks.com
- The company recently entered the Swiss market with two B-VAULT deals (2MW/2h for Schindler, 8MW/2h for Energie Wettingen).
- NRGV recently acquired 150MW Texas battery project.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Breakout From Flag Pattern: The daily chart shows that the stock was in a strong uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. The flag pattern is marked in purple color in the chart. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case. The stock has now broken out of the flag pattern, which is a bullish sign.
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 as well as 200-day SMA, indicating that the bulls have currently gained control.
#4 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates 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 and 200-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.
#7 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 NRGV is above the price of $4.40.
Target Prices: Our first target is $6.00. If it closes above that level, the second target price is $7.00.
Stop Loss: To limit risk, place a stop loss at $3.60. Note that the stop loss is on a closing basis.
Our target potential upside is 36% to 59%.
For a risk of $0.80, our first target reward is $1.60, and the second target reward is $2.60. 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 a history of NYSE notice of non-compliance. NRGV had received notice from the New York Stock Exchange on September 13, 2024, indicating that it is not in compliance with the NYSE’s continued listing standards because the average closing price of Energy Vault’s common stock was less than $1.00 over a consecutive 30 trading-day period.
- Hedge Funds Decreased Holdings by 1.2M Shares Last Quarter.
Hedge Funds | Source: TipRanks.com
- The energy storage hype could fade if AI demand slows or renewables face policy shifts.
- The company has customer concentration risk, as it depends on a limited number of customers for the majority of the revenue.
- Despite being a loss-making company, the executives are being paid significant compensation.
NRGV – Executive Compensation
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
