The Ultimate Growth Stock to Buy With $1,000 Right Now

Key Points

• DraftKings has seen solid growth in the past few years, and that has continued in 2025.

• A shift to better profitability should give the gaming stock some extra momentum.

• The sports betting market is expected to grow greatly in the coming years.

• 10 stocks we like better than DraftKings ›

Determining the "ultimate" growth stock is a pretty tricky endeavor, but one can give it a shot. To make this pick, you need to factor in growth rates, earnings, forward guidance -- the whole nine yards. Even then, it's pretty tough to pick the ultimate growth stock. To me, I really like what's happening with DraftKings (NASDAQ: DKNG).

Through the past few years, DraftKings has grown revenue but incurred fairly significant losses. Annual revenue has increased from $615 million in 2020 to $4.77 billion in 2024. The problem is that the company has lost billions in the process, which makes it hard for the stock to find big momentum, and that's why it has trailed the S&P 500 over the last five years.

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Image source: Getty Images.

More recently, things have changed. Second-quarter revenue increased 37% year over year to a little over $1.5 billion. DraftKings reported net income of nearly $157.9 million. Through the first half of the year, the company has created $124.07 million in earnings versus losses of $78.7 million a year ago. Revenue is up 28% year over year to $2.92 billion through the first two quarters.

To me, I think a more consistent shift to profitability is what the company has needed, and this will add more momentum to the stock price.

Other highlights for the company include a 6% increase in monthly unique payers, which reached 3.3 million average paying customers in Q2. It should be noted that without the inclusion of the company's purchase of JackPocket, monthly unique payers increased 5%. What I really like seeing here is the value being created from each monthly unique payer. Average revenue per payer increased 29% year over year in Q2 to $151.

Guidance and growth potential

Looking ahead, DraftKings is expecting fiscal 2025 revenue of $6.2 billion to $6.4 billion. That would conservatively represent a 30% year over year increase. Analyst estimates for earnings in fiscal 2025 are expected to be in the average range of $0.57, with top-end results anticipated to be $0.88. Based on the average, DraftKings is trading at 84 times earnings. If the subject were more traditional stocks, I'd cry foul on this valuation. But I'm talking about growth stocks, and 80 times multiples happen.

There is a lot of room left to go here. DraftKings is currently only available in 25 states. Half the country has the ability to make bets through DraftKings. Moving forward, as more and more states look to take advantage of this lucrative market, DraftKings stands to gain substantially in terms of overall users.

The evidence is in the expected increase in market size. According to an article on Yahoo Finance, the global sports betting market is expected to more than double to $235.19 billion by 2033. There is so much room here for sports betting stocks to run if they can make the most of the growth.

According to ESPN, the U.S. sports betting market hit $13.7 billion in revenue in 2024, while legal sportsbooks saw $150 billion in bets. Compared to the aforementioned global expectations, this is such an untapped market relative to what is anticipated in the future.

In all, I think there is very little reason to think that DraftKings and sports betting are going to go anywhere but up. The tax potential for governments is simply too intriguing to let it go. As of Aug. 11, states had collected over $8 billion in tax revenue from the industry since 2018.

As far as growth stocks go, I think this stock and industry are set for growth over the long term.

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David Butler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.