In Rough Markets, Look for Winning Trends

The market’s selloff in the past week has been extreme in its speed and severity. But investors in some sectors have been hit harder than others.

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  • Knowing where to look for winning long-term trends can lead to better performance during a market selloff. It may not always mean making a profit, but it could mean losing less. And over time, as stocks trend back higher, it could mean outperforming the market.

    Before the recent selloff, sports gambling stocks were riding high. They’ve since pulled back along with everything else. But industry leader DraftKings (DKNG) just got an analyst upgrade. The company’s business model makes it look like it will keep its industry edge for some time.

    Revenues are up 87 percent over the last year, and look set to trend higher. While still an early-stage company and unprofitable, it’s one of the largest players in the industry, which may see some consolidation in the months and years ahead as smaller players get bought out or go bankrupt.

    Action to take: Long-term investors may like shares here or on any further drop lower. The company is too young to pay a dividend, but like many other gambling companies, could start paying out once it’s profitable and growth slows.

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  • For traders, shares are likely to trend higher after the current market weakness is over. The December $30 calls, last going for about $2.30, could see mid-to-high double-digit gains in the months ahead.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.