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: Heartbeam Inc. (NASDAQ: BEAT)
Today’s penny stock pick is the medical technology company, Heartbeam Inc. (NASDAQ: BEAT).
Heartbeam Inc. primarily focuses on telemedicine solutions for the detection and monitoring of cardiac disease outside a healthcare facility setting. The company also focuses on providing diagnostic data to physicians with care management of patients with cardiovascular disease. Its telehealth product comprises a credit card sized electrocardiogram machine and a cloud-based diagnostic software system to address the rapidly growing field of remote patient monitoring.
Website: https://www.heartbeam.com
Latest 10-k report: https://sec.report/Document/0001779372-22-000011
Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for BEAT in the last 3 months, the stock has an average price target of $12.00, which is nearly 384% upside from current levels.
Analysts | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- BEAT was granted a patent in the U.S. for a 12-lead ECG patch monitor which opens an avenue for the company in Ischemia and Arrhythmia detection.
- Corporate Insiders Bought Shares Worth $984.1 in the Last 3 Months.
Insiders | Source: TipRanks.com
- BEAT is planning to submit AIMIGo for clearance in the U.S. by the end of 2022. AIMIGo is the first and only credit card-sized 12-lead output ECG device for remote heart attack detection with a 510(K) regulatory pathway.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Downtrend Channel Breakout: The daily chart shows that the stock has broken out of a downtrend channel, which is shown as purple color lines. This is a possible bullish indication.
BEAT – 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 Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#5 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.
#6 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 is a possible bullish indication.
BEAT – Weekly Chart
#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 BEAT is above the price of $2.80.
Target Prices: Our first target is $3.50. If it closes above that level, the second target price is $4.50.
Stop Loss: To limit risk, place a stop loss at $2.40. Note that the stop loss is on a closing basis.
Our target potential upside is 25% to 61%.
For a risk of $0.40, our first target reward is $0.70, and the second target reward is $1.70. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses.
BEAT – Summary of Statements of Operations
- The company has no revenues and limited operating history. BEAT also faces competition from other medical device companies that focus on similar markets.
- Despite being a loss-making company, the executives are being paid significant compensation.
BEAT – 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