Wednesday's IBD 50 Stocks To Watch pick, sports-betting giant DraftKings, is rapidly approaching a new buy point amid sharp gains. DraftKings stock has rallied more than 10% so far this week.
Boston's DraftKings is an online sports platform that allows users to play daily fantasy games and win cash prizes.
Sports-betting prospects look strong, with around 20% of U.S. adults saying they bet money on sports in some way in the last 12 months, according to a 2022 Pew Research Center survey. The American Gaming Association reports that the commercial betting industry saw record revenue in 2022.
On Feb. 16, DraftKings topped fourth-quarter estimates, reporting a smaller-than-expected loss. The company lost 53 cents per share vs. an 80-cent loss a year earlier. Meanwhile, Q4 revenue grew 81% to $855 million.
On the year, DraftKings reported a loss of $3.16 per share as revenue grew 73% to $2.24 billion. Analysts see DraftKings revenue growth continuing, averaging 22% annually through 2026.
DraftKings is on the road to profitability. After losing $3.16 per share in 2022, the company's loss is expected to narrow to $2.07 in 2023 and $1.01 in 2024, according to FactSet estimates.
DraftKings Stock Boasts Impressive Revenue Growth
Since the sports-betting leader remains unprofitable, DraftKings stock has a weak 46 out of a 99 Earnings Per Share Rating, according to IBD Stock Checkup. This metric takes into account growth and stability of earnings over the past three years, with the two most recent quarters weighed more heavily.
DraftKings lacks a long-term earnings track record but it does boast stellar revenue growth over the last three years. The company posted sales of $640 million in 2020, while 2023 revenue is expected to exceed $2.8 billion. In February, the company raised its fiscal 2023 revenue guidance to a range of $2.85 billion to $3.05 billion.
Finally, DraftKings stock shows a solid and improving 93 out of a perfect 99 IBD Composite Rating. This proprietary metric is designed to help investors easily measure the quality of a stock's fundamental and technical metrics.
DraftKings Stock Eyes Buy Point
DKNG shares reversed from early losses to climb more than 2% Wednesday midday, moving closer to a cup base's 21.72 buy point, according to IBD MarketSmith. A handle is still possible but not as important, with the stock just 2% away from the latest buy point.
Bullishly, the relative strength line just hit a new high, eliciting a blue dot on IBD MarketSmith charts. This technical indicator predicts DraftKings could be a big winner amid the ongoing confirmed uptrend in stocks.
Best Stocks To Buy And Watch
These are three recent IBD 50 Stocks To Watch picks.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| InMode | 41.94 | Cup | |
| Lululemon Athletica | 371.36 | Cup with handle | |
| Crocs | 143.60 | Cup |
Source: IBD Data As Of April 19, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
