Tech. Analyst Says Pharma Co. Is at a Favorable Risk/Reward Ratio

Source: Clive Maund  (12/28/22) 

Technical analyst Clive Maund reviews Algernon Pharmaceuticals Inc.’s 6-month, 3-year, and 9-year charts to tell you whether you should be interested in this pharma company.

On its 6-month chart, we can see that after dropping hard in mid-October, it has marked out a low trading range that has allowed downside momentum to drop out and the 50-day moving average has dropped down close to the price, in the process opening up a quite large gap between it and the 200-day and these factors taken together make a rally soon increasingly likely with the relatively strong Accumulation line over the past several months being another positive factor.

Zooming out on a 3-year chart enables us to put recent action in more perspective (note that this chart and the 9-year we are also looking at have been adjusted for a one-for-100-share rollback about a year ago, which explains the low number of shares in issue).

On this chart, we see that Algernon is now extraordinarily cheap as it has dropped back from a peak at over CA$53 in 2020 to the current miserly price of CA$2.50. The worst decline was behind it by late last year, since which time, although it has continued to make new lows, the rate of decline has slowed, with, as mentioned above, the Accumulation line showing a marked positive divergence in recent months.

The 9-year chart shows us the entire history of the stock, and on this chart, we see that it got to even higher levels than we saw in 2020, as back in 2016, shortly after it started trading, it got close to CA$110 and at the start of 2018 it spiked to about CA$103.

It looks like it is making a cyclical low here, close to the late 2019 lows.

Even without factoring in the extremely low number of shares in issue, Algernon looks like it is at a low here with a very favorable risk/reward ratio, which is magnified enormously by the low number of shares in issue, as any good news coming through – and there is believed to be some coming through soon — could see it take off strongly higher.

Algernon is therefore rated a strong speculative Buy here.

Algernon Pharmaceuticals’ website

Algernon Pharmaceuticals Inc. closed at CA$2.50, $1.76 on December 20, 2022.

CliveMaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

Disclosures:
1) Clive Maund: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Algernon Pharmaceuticals Inc. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Algernon Pharmaceuticals Inc. Please click here for more information.

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