Late in 2018 we put together a piece on our best ideas for 2019, and one of the names we chose was Roku (ROKU) .
The stock was poised for a strong move, but we had a longer timeline to get up to the $80 level, perhaps later in the year. However, we are not market timers -- instead, we like to follow trends and momentum.
Is there any stock out there with better upward momentum than Roku? The stock hit a new all-time high this week and is now sporting nearly a 200% gain on the year.
In the original article posted in January, we pointed out the bottom carved out on very heavy turnover. That is often a sign of exhaustion.
As a short-term trader, I'm looking for momentum but when a longer-term play is the objective, finding a spot when others are cutting the name is ideal. Such was the case, and when the company started delivering good news and guidance, it just became time to wait. That patience has paid off so far.
So, what about the stock now?
We think Roku could still deliver more gains, but this would be an ideal time to take some chips off the table. It's time to put on your risk management hat.
By no means are we bearish on the stock, but when you're up 100% or so in less than five months on a stock, then you have to be prudent. Even taking half a position down puts one in the enviable situation of playing with the house's money, something Jim Cramer preaches every single day on Real Money.
The charts show Roku stock is a bit extended here, but having reached the $80 mark we could see a move toward $100 in short order. Money flows are very bullish, Moving Average Convergence Divergence (MACD) is still on a buy signal and momentum is still showing upside.