As part of our 2019 forecasts we look at Roku, a tech stock with great ambition and equally great results. Based on the current chart pattern combined with its financials we believe Roku is a great tech stock to buy for 2019. We also publish our price target(s) for 2019.
As per our ‘start with the chart’ principle we consider Roku’s stock chart to start off with.
Although not visible on a regular chart there is clear ‘big picture pattern’ visible on Roku’s chart. That is the key issue with all short term noise, ranging from very short term charts to social media updates and mainstream media updates: they all focus on short term facts and figures without considering the long term trends.
As said many times on this blog it all starts with long term trends, as they determine the direction. It is the dominating forces at play that are by far the most important ones.
That is the underlying reason why we say ‘start with the chart’
Roku’s great stock chart going into 2019
The chart of Roku shows on the one hand a rising channel and on the other hand a rounding bottom within the channel. That’s a powerful combination, one that you do not find very often, so smart investors notice this and know how to benefit from it!
The rising channel is one that is important if it is a ‘pixel perfect’ one. The sharper it moves within the channel, with clear tops and bottoms at the channel trendlines, the more reliable.
Roku has a very reliable uptrend, that’s the key take-away for smart investors.
Also, the rounding bottom, which rook place within the channel, as perfect as it could be, is a powerful signal. A rounding bottom is very bullish in nature, certainly if combined with a perfect rising channel.
Why Roku looks like a great tech stock to buy for 2019
Moreover, financials of Roku are rock solid. Revenue grows ultra fast. The company makes even profits which is not a given for fast growing tech companies. Their shareholder dilution because of new shares is limited.
It is clear that Roku is fulfilling a clear consumer need. It underpins the great outlook of this company.
All in all, without discussing each and every detail of Roku in this article, we see that chart and financials suggest a great bullish outlook. That’s why we believe Roku is a great stock to buy for 2019.
The obvious price target based on the rising channel, confirmed by its financials, is around 80 USD which we believe may materialize in 2019. After this price target is met we’ll have to revise the situation at that point in time.
On the flipside, in case the 59.25 USD level breaks to the downside it would invalidate the bullish setup. This has a low probability though but investors never should exclude to consider the flipside.
This is not a sell or buy call. This article is meant to be educational.
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