Stocks opened higher Wednesday ahead of the inauguration of Joe Biden as the 46th President of the United States, and closed at record highs after the event unfolded without any disruptions, buoyed by a new sense of calm and optimism for a COVID recovery.
The DOW closed up nearly 258 points, while the S&P 500 was up almost 53 points, and the NASDAQ soared over 260 points.
There are all kinds of buy opportunities floating around right now, but these are our Top 3 picks for this week to bank on continued optimism and sound fundamentals ...
#1 Netflix (NASDAQ: NFLX)
With more than 80 million subscribers in the U.S. and 207 million subscribers globally, Netflix is still the market leader in the streaming business, even if the competitive heat is being turned on seriously.
Netflix’ market share may have dropped from 25% in Q3 to 22% in Q4 2020, but that has stopped the stock from soaring.
Netflix saw a 15% gain today--the biggest it’s seen since 2016--after reporting more subscribers than forecast.
According to fourth-quarter earnings, Netflix added a record 37 million paid subscribers last year, well ahead of management's guidance for 6 million, and added up to $34 billion to its market capitalization.
The company also said it is close to being free-cash flow positive and is considering stock buybacks.
Despite the growing competition from Disney+, Peacock and HBO Max, Netflix is projecting that it will add 6.0 million new subscribers in the first quarter of this year.
In a decade, Netflix has seen its stock rise 1,790%, far outperforming the S&P 500.
And some would say it’s still got very long legs …
#2 DraftKings (NASDAQ: DKNG)
DraftKings, daily fantasy sports contest and sports betting provider, was already a major beneficiary of the pandemic; but earlier this week, it saw its shares skyrocket once again.
The newest stock boost came after Morgan Stanley reported that this year 12 more U.S. states would push for sports betting legalization in order to fill holes in their budgets caused by the pandemic.
Morgan Stanley's analyst Thomas Allen Allen said DraftKings could beat revenue estimates for fiscal years 2022 to 2025 by 25%
In November, voters in Louisiana, Maryland, and South Dakota approved sport betting bringing the grand total to 26 states that have either launched legal sports betting or passed the legislation and are waiting to launch.
Last April, DraftKings went public by merging with Diamond Eagle Acquisition, a public SPAC. The company grew revenues 23.6% year-over-year, but reported a loss of 55 cents a share.
In 2020, the company also announced sports betting partnerships with several NFL and MLB clubs.
In the note, Allen raised the total market of i-gaming and betting, worth $3 billion in 2020, by 27% to $15 billion in 2025.
Yet, Gambling Compliance suggests that the U.S. market for legal sports betting will reach $5.7 billion in annual revenue and spread to 34 states by 2024. A more optimistic prediction is that the market could grow to $7.9 billion and encompass 40 states by 2024.
According to the American Gaming Association, Americans illegally gamble at least $150 billion on sports in a year using bookies, illegal offshore websites and informal sports pools. Another $5 billion came about in 2018 legally from Nevada.
#3 Gevo (NASDAQ: GEVO)
Clean energy stocks have been on the rise since the presidential election, as Joe Biden has outlined a $2 trillion plan to fight climate change and has pledged to put the U.S. on a path to a 100% clean-energy economy by 2050.
Up almost 35% in pre-market trading on Tuesday, renewable energy company GEVO looks set to be a clear beneficiary of the rally. The company develops bio-based alternatives to petroleum-based products via biotechnology and classical chemistry.
The stock was also riding on last week’s news when the U.S. Department of Energy’s Office of Fossil Energy announced $160 million in funding to assist recalibrating the country’s broad fossil-fuel and power infrastructure for decarbonized energy.
An additional boost to the company is the fact that its co-founder and Nobel Laureate Frances Arnold was named to President Joe Biden's Science Team.
By Michael Kern for Safehaven.com
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