Whether investors believe in Wall Street’s predictions or a price chart’s forecasting abilities, when it comes to Roku (NASDAQ:ROKU) it’s time to tune in and buy shares today. Let’s examine what a risk-adjusted buy of ROKU might look like inside your portfolio.
Do you ever wish you got into market leaders Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) or Disney (NYSE:DIS) ahead of the curve and at a fair price? In a way that’s now possible with ROKU stock.
The over-the-top device giant whose hardware is synonymous with streaming entertainment — offered by the aforementioned household giants — has had to endure a common, but always troubling corrective period over the past few weeks with shares losing roughly 45% at their darkest hour. That’s value, right?
The Decline
Sure, there is no shortage of reasons for ROKU stock’s decline. From Apple’s (NASDAQ:AAPL) aggressively priced Apple TV+ platform, Comcast’s (NASDAQ:CMCSA) announced entrance into Roku’s market and a bearishly inspirational analyst call, bears have lots of ammo at their disposal.
But more importantly, there’s also fresh reason to believe that not buying ROKU today will be a bigger mistake.
Macquarie analyst Tim Nollen upgraded shares Wednesday from “neutral” to “outperform” while raising his price target on ROKU stock price by $20 to $130. Behind the bullish call, the firm cited the company’s smart TV operating system integrations which apparently won’t be so easy to copy.
According to Macquarie, Roku’s operating system integrations could triple the company’s active accounts to more than 70 million by 2022 and deliver revenue of $2.7 billion.
And where it matters on the price chart, the immediate response from investors has been good. ROKU stock rallied 8% on the back of the call. Further, the reaction also confirmed a fairly healthy end to the stock’s common corrective activity on the price chart. This means it’s time to buy Roku stock today.
ROKU Weekly Chart
Back in late September I said I’d like to see a key support area from $96-$102 successfully tested. If that happened, I’d consider a purchase. It may have been asking for a lot to go right in order to buy Roku. But that’s exactly what played out in ROKU’s stock price.
With shares triggering a bullish stochastics crossover in oversold territory and Roku confirming last week’s inside bottoming candlestick, the decision is an easy one. Along with a purchase of Roku stock, I’d recommend a stop beneath $97 should it be necessary. This strategy keeps exposure contained to roughly 16%. That’s certainly no small amount of risk to accept. I get it. Still, with a new bullish chapter emerging for a high-flying growth story that looks far from finished, that potential end certainly justifies the means in our book.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
