Great trade setups don’t materialize every day.
When you find one, you have to seize it.
Today, we have an opportunity to buy a high-reward stock with little risk. Longtime readers will be familiar with its name…
DraftKings (DKNG) operates as one of the world’s biggest online gambling platforms.
I first recommended DKNG in April 2023. At the time, the stock was trading for around $20.
Since then, it’s more than doubled in value.
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Congratulations if you acted on my initial recommendation. I’m still bullish on DraftKings today, so we’re going to double down on this winner.
To understand why, look at DKNG’s daily chart below. As you can see, the stock has been more or less consolidating since February. During that time, it pulled back 20%.
This is perfectly normal behavior after a big move higher.
In fact, I believe the recent pullback provided a much-needed reset.
The table is now set for another big move to the upside, as DKNG has recently reclaimed its short-term moving averages:
Source: StockCharts (click to enlarge)
It’s also worth mentioning that DraftKings already reported its first-quarter earnings. And once again, the results were impressive.
DraftKings’ first-quarter sales increased 53% from the same period a year ago, while its net income jumped 64%.
Management also raised its 2024 fiscal-year revenue guidance.
I suggest picking up a starter position in DKNG today. I believe the stock could hit $72 within the next 12–18 months.
Exit your position if DKNG closes below $42. That gives us a risk-reward ratio of 10:1 on this trade.
Action to take: Buy DKNG at current market prices.
Risk management: Exit your position if DKNG closes below $42.
Justin Spittler
Chief Trader, RiskHedge
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