During the onset of the coronavirus pandemic, sports betting stocks fell precipitously with some casino operators saw a half of their value evaporate into thin air. The industry faces some of its biggest losses in decades as most casinos were ordered to shut to curb the spread of the novel coronavirus. However, the closure of physical casinos is not stopping players from venturing into online gambling. With everything going online, the internet has been the new arena for the gaming industry during this unprecedented time.
Although top sports betting stocks remain largely speculative, the potential return of this online offering is likely to be a boon for gambling companies. If you don’t already know, sports gambling is in fact sweeping the nation following federal legalization in 2018. That said, 21 states have legalized sports betting, and an estimated $13 billion in wagers was placed nationwide in 2019. And bear in mind, we are just in the second year of legalization. There’s a great chance the growth we are seeing in this niche is likely to stay in the near-medium term. To top it all off, more states could see the legalization of sports betting, with referendums in three states – Maryland, Louisiana, and South Dakota coming up next month.
According to Bank of America (BAC Stock Report), sports betting could reach half of the U.S. population by 2022. 30% of the population would have access to mobile gaming. U.S. sports gambling is expected to grow at an annualized rate of 32% over the next three years. If you are looking to bet on the rise of U.S. sports gambling, do these three stocks deserve your attention?
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One of the biggest winners this earnings season was MGM (MGM Stock Report), a casino stock that has a major foothold in the U.S market. MGM stock is down 36.42% year-to-date along with other major casino operators. Despite the lackluster performance, MGM has a big stake in sports gambling as well. Unlike Penn and DraftKings (DKNG Stock Report), MGM stock is offering a value buy for investors looking to have a piece of the company at a discount.
Most investors would agree that U.S. sports betting is only getting started. This could pose an excellent long term opportunity. Not only does MGM have a strong foothold in the U.S., but MGM also has a 55.9% stake in the MGM Macau and MGM Cotai resorts in Macau, China. Macau is the world’s largest gaming destination by total revenue. The company’s strong financial position can be seen in its recent earnings report. It has a cash position of $4.8 billion. Although its EPS was at negative $1.52 per share, that was better than Wall Street estimates. In another show of confidence, billionaire media mogul Barry Diller invested $1 billion for a 12% stake in MGM Resorts. That would certainly quash most if not all of the doubt that investors may have about MGM.
MGM is a safe gambling stock for the long-haul. With high-profile gambling partnerships with the Denver Broncos and the National Baseball Association in the pipeline, there is a large potential for growth. In addition, with the opening of its BetMGM operations in West Virginia. This online gambling program allows MGM to serve gambling aficionados in the comfort of their own homes. It is essentially another revenue source to help offset the decrease in revenue from physical casino outlets. MGM is still doing a respectable job despite the situation the industry is in. Although it will take a while before things go back to normal, MGM is taking things one step at a time. Investors appear to find comfort in that. Do you?Top Sports Betting Stocks To Buy [Or Sell] In October: Flutter Entertainment
Flutter Entertainment (PDYPY Stock Report) may not be a household name, because it is based outside the U.S. Besides, it’s currently available only through the over-the-counter markets. Alternatively, if you have access to the global stock exchange, this company trades on the London Stock Exchange. But investors should get comfortable with this international stock, as it has a large cash flow base it is using to expand what is more of a household name in this country.
Flutter owns FanDuel, one of the most well-known fantasy sports and online sports betting apps in the U.S. Flutter is seen as a safer alternative to DraftKings (DKNG Stock Report). You see, DraftKings is a smaller company and that brings with it more risks. It also trades at a higher valuation at over 50 times sales. Furthermore, DraftKings is not profitable yet.
Flutter, on the other hand, looks like a value stock in comparison. At about four times sales, and with a more diversified range of businesses besides FanDuel, Flutter has a more robust business at a more attractive valuation. It is not every day that there is an opportunity to get more for less. And smart betters know that. Flutter generates cash flow that will help grow its U.S. betting business. It has also partnered with U.S. regional casino operator Boyd Gaming (BYD Stock Report). Boyd operates 29 casinos in 10 states, and FanDuel will be helping with its online customer base. With all these in mind, does PDYPY stock make your heart flutter?Top Sports Betting Stocks To Buy [Or Sell] In October: Penn National Gaming
Penn National Gaming (PENN Stock Report) has surged 42.7% in September, cruising along with the rally among online casino stocks. PENN stock has been the favorite among investors because of its Barstool Sports wagering platform. Granted, DraftKings does have the first-mover advantage on its side. Yet, what this company lacks is its own Dave Portnoy. The Barstool impresario, who has become more famous than ever thanks to his foray into day trading, has helped drive more attention to Barstool. But here’s a question, with the recent weaknesses in PENN stock, should investors buy on the dip? If you believe in the potential of the sports betting industry and the moat that the company has, just go ahead with what’s in your mind.
Penn National “has the potential to gain significant share in online betting, driven by their partnership with Barstool providing a differentiated customer acquisition strategy,” McTernan noted, adding that “while we continue to expect DraftKings and FanDuel to be leaders in the online betting space given their first-mover advantages … Penn could already have their ear, an envious position.”
As you may or may not know, the company owns and manages traditional gaming, racing properties, and operates video gaming terminals with an emphasis on slot machines. As we are a few weeks into the National Football league (NFL), many investors are anticipating that PENN stock could benefit immensely from its stake in Barstool Sports. Barstool is big with younger millennial bettors. With the recently launched mobile betting app from Barstool, the investment could pay off in more ways as the NFL season progresses.