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Lucky Gambling Stocks By James Blakeway
here was a time when Americans who felt the itch to gamble packed a bag and flew to Las Vegas to revel in one of the few meccas of legal gambling on the continent. Failing that, they could make a cash bet with a buddy that Michael Jordan would score more than 30 points that night. But times have changed. More states have legalized gambling and online sports betting, paving the way for companies to cash in on Americans’ love of wagering. That brings opportunities for investors because some of the nation’s top gambling firms are publicly traded. It provides a sub-sector for diversification, but keep in mind that investing in gambling firms represents another bet on discretionary consumption. For investors looking to stick with the traditional Las Vegas companies, stocks offer access not just to casino profits but also to a post-COVID resurgence in tourism. Publicly traded firms own the largest brands on the Las Vegas Strip. In the traditional hotel and casino market, investors can choose among shares in Caesars Entertainment (CZR), Wynn Resorts (WYNN), MGM Resorts (MGM) and Las Vegas Sands (LVS). Both Caesars and MGM have more than recovered from the
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slump of early 2020, while Wynn and Las Vegas Sands both saw their peak prices in 2018 and have not touched them since. Macau and beyond
Of the four companies, Las Vegas Sands is betting the most on international markets. Despite still trading on the New York Stock Exchange, many of Las Vegas Sands’ properties are now located in Asia, with five in Macau and the iconic Marina Bay Sands in Singapore. Keep that international concentration in mind. With the company’s stock well below its 2018 high of $81.45, investors may find upside opportunities as the tourism industry continues to recover around the world. For other exposure to the Macau gambling market, investors can analyze Melco Resorts (MLCO), which trades on the NASDAQ. Much like Las Vegas Sands, Melco is above the 2020 lows but still far from its 2018 peak of $32.95. While many still consider Las Vegas the gambling hub of the country, wagering-oriented firms continue to expand across the nation. States continue to relax gambling bans and restrictions, happy to accept the tax revenue and economic opportunities that gambling affords. Two companies that stand out are Boyd Gaming Corp. (BYD)
While many still consider Las Vegas the gambling hub of the country, wageringoriented firms continue to expand across the nation.
and Penn National Gaming Inc. (PENN). Both operate portfolios of casinos across the country. In January 2020, Penn acquired a 36% stake in Barstool Sports, and the companies launched Barstool Sportsbook in September. They plan to continue expansion of their online sports-betting business. Both Boyd and Penn saw massive rallies in their stock price from the middle of 2020 to early this year before recent pullbacks. Investors looking for a more direct sports-betting investment can look to DraftKings Inc. (DKNG), which IPO’d via a SPAC (special-purpose acquisition company) merger in late 2019. Since then, DraftKings’ shares experienced a volatile rise to a high of $74.38 in March. Investors feeling bullish on the company’s continued expansion into new markets and product offerings may wish to take advantage of any steep slumps in the stock price. Longer-term, investors should keep their eyes on California in 2022, when sports gambling will be up for legalization via ballot initiative. Legalized sports gambling in the country’s most populous state would be a game-changer for companies. Exchange-traded funds
In many industries and subindustries, exchange-traded fund provid-
Past performance is no guarantee of future results. Information provided in an EPI Report does not consider the specific profile, objectives or circumstances of any particular investor or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her investment professional. Investment suitability must be independently determined for each individual investor. QF does not make suitability determinations or investment recommendations for investors. EPI utilizes the S&P 500 as its benchmark given that the S&P 500 is considered a barometer of stock performance in the United States. Aspects of the analysis and information found in an EPI Report are based upon simulated and/or hypothetical performance. Simulated and hypothetical performance have inherent limitations and do not represent the actual performance results of any particular investment products. The EPI Report does not guarantee any results or outcomes in the financial markets. Investors should be aware of the methodology used to produce an EPI Report and the inherent limitations when placing reliance on the results. For additional information about EPI Reports, visit the QF website: quietfoundation.com.
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