We recently published a list of Jim Cramer’s Latest Portfolio: 10 Best Stocks to Buy. Since DraftKings Inc (NASDAQ:DKNG) is on the list, it deserves a deeper look.
Jim Cramer in his latest program talked about discipline during short-term market rallies and emphasized the importance of knowing when to take some profits off the table when things are going your way. According to Cramer, the “most important lesson” in short-term rallies is that “you always have to work hard to prepare yourself for the future.”
Cramer said that you should not “give in” to the market euphoria and hit “buy, buy, buy” when the market is “roaring.” The CNBC host said for many it becomes difficult to sell because they feel they were late to the rally and want to hold on to their best-performing stocks during bull runs. But Cramer questioned this thinking: if your portfolio sees big gains and you let it “ride” the rally without selling any stocks and eventually those gains begin to “evaporate,” how is that different from totally missing out on the rally? “It isn’t,” Cramer said.
Cramer talked about the post-COVID rally of 2020 and 2021 where the market saw an “unbelievable” bull run, only to pare those gains after the Fed’s pivot and its “war” on inflation. Jim Cramer advised investors to always remain “tethered” to reality.
“If you would have sold stocks gradually on their way up as I told you to do you’d have been in a much better shape as the market spent the next 11 months getting obliterated,” said Cramer.
For this article we watched several latest programs of Jim Cramer aired over the past few days and picked 10 stocks he’s bullish on. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
DraftKings Inc (NASDAQ:DKNG)
Number of Hedge Fund Investors: 64
A caller recently asked Jim Cramer whether DraftKings Inc (NASDAQ:DKNG) is a Sell or a Hold. Cramer said it’s a Buy because the stock has come “down all the way.” Cramer thinks DraftKings is in “good shape.”
Morgan Stanley analyst Stephen Grambling recently called DraftKings Inc (NASDAQ:DKNG) a top pick in the US gaming and lodging sector. The analyst said DraftKings Inc (NASDAQ:DKNG) reiterating its guidance despite the tax hike on sports betting in Illinois shows underlying business strengths.
“Our unchanged 12-month price target of $51 is based on an unchanged 50/50 weighting of ~14x 2026 EV/EBITDA discounted back at a ~13% cost of capital ($45 value) plus our DCF of $56 using a terminal growth rate of 2.5%, WACC 9.25%, and longterm leverage of ~2x (~30% of EV),” the analyst said.
Earlier this month, Bank of America also added DraftKings Inc (NASDAQ:DKNG) to its US 1 List. The list includes some of the firm’s best investment ideas that are drawn from the large universe of Buy-rated, U.S.-listed stocks.
In May DraftKings Inc (NASDAQ:DKNG) reported strong Q1 results and increased its full-year guidance. DraftKings now expects a revue of $4.9 billion (growth of 33.9% YoY) and Adjusted EBITDA guidance to $500 million (growth of 431% YoY) in the period. Average analyst estimate set by Wall Street on the stock is $52.20, which shows a 20% upside from the current levels.
Baron Discovery Fund stated the following regarding DraftKings Inc. (NASDAQ:DKNG) in its first quarter 2024 investor letter:
“Shares of DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook in the U.S., rose during the quarter following an earnings release that showed strong market share gains and an improved outlook for future profitability. Market share capture has been driven by investment in innovative product offerings that are resulting in strong customer retention. The company also announced the acquisition of JackPocket, a digital lottery courier service. We believe the acquisition will help DraftKings achieve a first-mover advantage in many states that offer the JackPocket service but have not yet legalized online sports betting and casino gaming. DraftKings is well positioned to expand margins and generate positive free cash flow as it grows revenues alongside the rapidly expanding U.S. sports betting market, in our view.”
Overall, DraftKings Inc (NASDAQ:DKNG) ranks 5th on Insider Monkey’s list titled Jim Cramer Latest Portfolio: 10 Best Stocks to Buy. While we acknowledge the potential of DraftKings as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DraftKings Inc (NASDAQ:DKNG) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.