3 Stocks I am looking at for July 2020
Updated: Jul 15
As I went back to last months post, I realised that as I wrote the June article, the market had gone red for 3 days in a row in May which presented an excellent buying opportunity (If you believe that the dip was temporary). Well, the same thing happened at the end of June, opening some opportunities for some profits in July. So, here are the 3 stocks I bought at the end of June as I believe the volatility of the market will bring these up quickly in July.
As many are claiming, it’s a “Kangaroo” market, meaning that the market keeps jumping up and down on any news that is even faintly relevant to a stock. I believe that is the case, and therefore am comfortable with continuing to trade short term.
Draft Kings (DKNG)
Yes, Draft Kings (DKNG) once again features on this list. In late May, I had bought into DKNG in the low $30s and sold it close to $40. It turns out that about $40 is as high as DKNG will go for the time being. If we take a look at its 3 month chart (it is a new stock, so we cannot look to far back), it has appeared to stabilise between $30 and $40. Therefore, when it dips closer to $30 again, I will be looking to buy more.
Why am I confident that Draft Kings will go back up higher? Earlier in late May, there was some positive news about the NBA and NFL starting up again and this was when the US considered the COVID-19 situation to be stabilizing. Because of this optimism about US sports starting back up again, DKNG’s price appreciated as their main source of revenue is sports betting in the US. Recently in the last few weeks, the optimism has turned to pessimism as the US struggles to get back to normal. However, I believe, this will be short lived. Many global sporting events have restarted under very controlled environments. Most of the European football leagues have resumed behind closed doors, and so has Formula 1. Therefore, the US sports industries will be using these examples as learnings and evidence that they should be able to start back up. Once that optimism returns, we can expect DKNG’s stock to climb back towards the 40s.
However, it should be noted that if you are trading the DKNG stock on a short term basis then remember the mantra “Buy the rumour, sell the news”. Right now the idea is to buy the rumour that US sports will start back up, however for short term traders, it is essential to sell off DKNG before the actual confirmation of the news as highlighted in my "Buy the rumour" post.
OPES Acquisition Corp (OPES) / BurgerFi
OPES Acquisition Corp (OPES) is a SPAC and I have been focusing on some SPACs as I believe they have a huge opportunity for short term trading. OPES has reached an agreement with BurgerFi for a merger sometime this year.
I think BurgerFi has a strong brand and food related stocks have had a good track record in the US in recent times. The current merger agreement puts the value of BurgerFi at $143 million or 2.4 times of BurgerFi’s net revenues. I think that is a very conservative valuation and the OPES stock should appreciate closer to the merger. BurgerFi might also be a good hold long term because it has immense potential for scaling as it is only limited to some parts of the US. If it does manage to scale up quickly in the next few years, then the returns on this could be massive. However, I am only looking to hold this short term until the merger takes place.
Beyond Meat (BYND)
Another food related company for this month, Beyond Meat (BYND).
Recently there have been a lot of news about virus outbreaks in meat packing plants. First these news came out of the US, and then later similar stories were heard out of the UK, Europe and China. It appears that meat packing plants are prone to these outbreaks considering the current situation in the world.
As such, BYND is something that got me curious. I am primarily looking at it because it appears that the transition to plant-based “meats” could be accelerated during such a time. Also, a golden opportunity presented itself last week when the price of the BYND stock fell from $160s to $130s (almost a 20% drop). This opportunity was too big for me to resist because for the reasons mentioned above, I fully expect the BYND stock to go back above $150 very quickly.
So these were my 3 picks for July. I am quite confident about these because personally I think I got in at a good price and am in a great position to make a quick profit off these 3 stocks. If they drop even more, I would be quite happy to increase my position on them.
Disclaimer: This post should not be interpreted as investment advice as I am not a professional financial consultant. The objective of this blog is to share my experiences with others and receive feedback. I will provide links to my information sources to the best of my abilities, but the reader is responsible for their own due diligence