We recently compiled a list of the Jim Cramer’s Latest Game Plan: 15 Stocks to Watch.In this article, we are going to take a look at where DraftKings Inc. (NASDAQ:DKNG) stands against the other stocks in Jim Cramer’s latest game plan.
Jim Cramer, host of Mad Money, recently weighed in on the factors that will shape market movements this week, pointing to the Federal Reserve’s upcoming meeting and a slew of corporate earnings reports as key developments. However, despite the importance of these earnings, Cramer believes that the presidential election will take center stage and dominate the market’s attention.
While acknowledging the significance of the election, Cramer emphasized that the Federal Reserve’s next decision is perhaps even more crucial for the markets. He noted that the bond market has been moving in an unfavorable direction, with the situation further complicated by a disappointing non-farm payroll report.
Though this report was skewed by hurricanes and labor strikes, it initially sparked a positive reaction in the bond market, pushing rates lower. Cramer had hoped that this would signal a positive shift, but the optimism was short-lived, as bond sellers quickly drove rates back up to their highest levels since early July.
“In my opinion, the Fed needs to cut rates again. In the last couple weeks, we’ve heard from too many businesses that have made it clear that we have a real slowdown on our hands. Economy’s a little shaky.”
Cramer also reflected on the Fed’s decision to reduce rates in September. He acknowledged that the bond market reacted negatively to the rate cuts at the time despite an economy that appeared relatively strong and a healthy labor market. Cramer discussed the possibility that if the Fed were to cut rates again, the market could see another unfavorable response. However, he remained unconcerned about this potential backlash, arguing that a rate cut could help to generate optimism in certain sectors.
“At this point in my view, if the Fed cuts rates next week, psychologically there’s some hope that we could see a pickup, particularly in housing and autos, two industries that seem to be losing strength by the day.”
Cramer highlighted that both presidential candidates appear willing to expand the federal budget. His main concern, however, was whether either candidate would be able to push their proposed agendas through Congress, a process he described as extremely difficult. Cramer noted that, in his opinion, presidential candidate Trump would likely be a bigger proponent of increasing the budget deficit than presidential candidate Harris, particularly due to the tax cuts Trump favors, which tend to result in larger deficits.
Stating his bottom line, Cramer said:
“… At the end of the day, the market’s still going to be hostage to the election, and perhaps more important, to the Fed meeting.”
Our Methodology
For this article, we compiled a list of 15 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 1. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
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).
A woman at a betting table paying out customers who won their sports bets.
Number of Hedge Fund Holders: 56
DraftKings Inc. (NASDAQ:DKNG) is set to report its third-quarter results on November 7. Cramer called it a “terrific story”.
“DraftKings also reports after the bell. And you know, you might be shocked to find out that there’s gambling going on here. I think it’s a terrific story and a very good investment.”
DraftKings (NASDAQ:DKNG) is a leading digital sports entertainment and gaming company, providing a range of online products and services. The company offers online sports betting, casino games, daily fantasy sports, and retail sportsbooks. In addition to its consumer-facing offerings, it develops and supplies sports betting and casino gaming software for online and retail sportsbooks, as well as iGaming operators.
The U.S. sports betting market has seen rapid growth in recent years, with Goldman Sachs Research projecting that Americans could spend $45 billion annually on sports betting once the market matures. Since 2018, sports betting in the U.S. has evolved into a $10 billion industry. As of Q2, the company reported 3.1 million monthly unique players, indicating substantial potential for further user growth.
DraftKings (NASDAQ:DKNG) has been actively expanding its presence in other sectors of the gaming industry, largely through acquisitions. In 2022, the company acquired Golden Nugget Online Gaming to strengthen its position in the iGaming market, a move that has already proven beneficial. During the last earnings call, management highlighted that in a recent third-party survey, the DraftKings and Golden Nugget apps were ranked No. 1 and No. 2 in iGaming.
Additionally, the company made another acquisition in 2024, purchasing the digital lottery platform Jackpocket. This move is aimed at capitalizing on the expanding lottery market, with management expecting Jackpocket’s integration to positively contribute to EBITDA by 2025.
As DraftKings (NASDAQ:DKNG) continues to grow and expand into new markets, the company is also addressing the challenges posed by high-tax states. For states with multiple sports betting operators and tax rates exceeding 20%, including Illinois, the company intends to introduce a gaming tax surcharge starting January 1, 2025.
Overall DKNG ranks 8th on our list of the stocks in Jim Cramer’s latest game plan. While we acknowledge the potential of DKNG 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 DKNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
