Gambling And Stocks

Five gambling stocks with great potential in 2020. Given below are five gambling stocks that one should keep an eye on in regard to gambling in legalized sports. MGM Resorts (NYSE:MGM) Betting on a small scale in sports is considered unimportant and insignificant in Las Vegas, USA. Gambling is defined as staking something on a contingency. However, when trading is considered, gambling takes on a much more complex dynamic than the definition presents. Many traders are gambling. One area benefiting from the growth and sophistication of technology is gambling, especially sports betting online. These four stocks look attractive for aggressive accounts seeking ideas that.

© Provided by 24/7 Wall St. With the election results still being counted, one thing is for sure. Anything that can generate tax revenue without being an onerous strain on citizens is getting a good bit of attention after the election, and with good reasons. The Supreme Court ruling in 2018 that struck down a 1992 federal law that effectively banned commercial sports betting in most states has been opening the door to legalizing the estimated $150 billion in illegal wagers on professional and amateur sports that Americans make every year.

Since then, more and more states are allowing casinos to open sports books and also legalizing fantasy and e-game betting. Many states, such as Louisiana, Nebraska and Maryland, have gambling initiatives on the ballot. It appears that they passed in those three states.

We screened our 24/7 Wall St. research universe looking for companies that stand to benefit and found five that are solid picks now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Boyd Gaming

This top stock remains a Wall Street favorite. Boyd Gaming Corporation (NYSE: BYD) operates as a multi-jurisdictional gaming company with 30 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. It also owns and operates a travel agency. The company was founded in 1973 and is headquartered in Las Vegas, Nevada.

The company remains a favorite for Las Vegas locals and is substantially levered to the Las Vegas market. The company generally targets largely locals in this market. The company’s downtown properties also draw Hawaiian tourists. In general, Las Vegas locals performance is less affected by weekends versus weekdays in a period than other gaming markets would be, as a substantial portion of the local economy works in hospitality.

BofA Securities has a Buy rating and a $40 price target. The Wall Street consensus target is even higher at $42.36. Boyd Gaming stock traded early Thursday at $33.45.

DraftKings

The company became a huge favorite with younger people due to the surge in popularity of fantasy football. DraftKings Inc. (NASDAQ: DKNG) operates as a digital sports entertainment and gaming company. It provides users with daily sports, sports betting and iGaming opportunities. It also is involved in the design and development of sports betting and casino gaming platform software for online and retail sportsbook and casino gaming products.

The company entered the market back in April in a time when most companies were putting off their initial public offerings. The offering was not an IPO in the truest sense because DraftKings came public through a merger with a special purpose acquisition company called Diamond Eagle, but similar rules applied.

The stock was hammered after a big move and is offering aggressive investors an incredible entry point. Top Wall Street analysts feel that sports betting should accelerate after the pandemic and the market for sports betting in the United States could reach $19 billion by 2023 to 2025. They also expect that in 2021 and beyond, engagement with digital leisure, pent-up appetite for sports and political realities should position DraftKings to accelerate.

Oppenheimer has an Outperform rating and boosted the price target in October to $65 from $55. The consensus target is $58.74, and DraftKings stock traded at $41.55 on Thursday.

Penn National Gaming

This is an analysts' favorite for online gaming and shares have backed up nicely after a massive run earlier this year. Penn National Gaming Inc. (NASDAQ: PENN) owns and manages gaming and racing properties, and it operates video gaming terminals with a focus on slot machine entertainment. It also offers live sports betting at its properties in Indiana, Iowa, Mississippi, Nevada, Pennsylvania and West Virginia, and it operates an online casino under the name of iCasino in Pennsylvania.

Earlier this year, Penn National bought a 36% stake in Barstool Sports valued at $450 million, along with options to increase its stake to 50% in the future. Barstool is a sports media empire that claims 66 million monthly active users, roughly 100 million social media followers and two of the top 30 podcasts in the country.

Last month, Penn and Barstool jointly debuted Barstool Sportsbook, a digital sports betting app now available in Pennsylvania. The early success has been astounding. In its opening weekend, Barstool Sports Book surpassed the DraftKings and FanDuel preliminary download records. Penn's and Barstool's platform now boasts 48,000 Pennsylvanian users as of Penn's most recent update.

With a huge growth potential, and a big drop in the share price, this is an incredible play for aggressive growth investors.

The Barclays Overweight rating comes with an $85 price target. The consensus target is $74.64, and Penn National Gaming stock was last seen trading at $63.85.

Scientific Games

This is a play on the technology side of the sports betting potential. Scientific Games Inc. (NASDAQ: SGMS) develops technology-based products and services and related content for the gaming, lottery, social and digital gaming industries in the United States and internationally.

Its Gaming segment sells new and used gaming machines, electronic table systems, video lottery terminals, conversion game kits and spare parts; slot, casino and table-management systems; table products, including shufflers; and perpetual licenses to proprietary table games. It also leases gaming machines; provides gaming operations and licensing arrangements; and installs and supports casino management systems, such as ongoing hardware and software maintenance and upgrade services of customer casino management systems.

Scientific Games digital segment provides digital gaming and sports wagering solutions and services, including digital RMG and sports wagering solutions, distribution platforms, content, products and services; software design, development, licensing, maintenance and support services; Open Platform Systems; and content aggregation platforms.

Back in September, institutional investors, including highly credentialed gaming industry investor Caledonia, bought a 34.9% stake in Scientific Games. The company expects capital expenditures in the range of $210 million to $240 million and positive free cash flow for fiscal 2020.

A $50 price target accompanies the Jefferies Buy rating. The consensus target is much lower at $29.11. The last trade posted on Wednesday came in at $35.26, after a more than 3% pullback following third-quarter results that disappointed some. Scientific Games stock traded at $36.15 Thursday morning.

Wynn Resorts

While a more traditional gaming play, this high-end company is a prime Las Vegas destination and its stock offers a superb entry point. Wynn Resorts Ltd. (NASDAQ: WYNN) operates Wynn Macau and Encore at Wynn Macau resort located in the People's Republic of China.

The Macau resorts feature approximately 284,000 square feet of casino space, which offers 24-hour gaming and a range of games, with 458 table games and 708 slot machines, private gaming salons, sky casinos and a poker room. Its two luxury hotel towers have a total of 1,008 guest rooms and suites, as well as casual and fine dining in eight restaurants, about 57,000 square feet of retail shopping in stores and boutiques, around 31,000 square feet of space for lounges and meeting facilities, and the Rotunda show. Recreation and leisure facilities include two health clubs, spas, a salon and a pool.

In Las Vegas, the company also owns and operates the Wynn Las Vegas and Encore at Wynn Las Vegas resorts, with a total of 4,748 hotel rooms, suites, and villas; 232 table games; 1,866 slot machines; a race and sportsbook and poker room in approximately 186,000 square feet of casino gaming space, including a sky casino and private gaming salons.

BofA Securities has a Buy rating and a $95 price target, while the consensus target is $90.81. Wynn Resorts stock was trading at $78.10.

It is clear that states need revenue. While some cringe at gambling as a source, for many it is more palatable than, say, recreational marijuana. All these stocks offer aggressive growth investors a great way to play the trend, while some serious selling recently has put prices at an outstanding level.

Published on April 20th, 2020 by Harvi Sadhra

This is a guest contribution by Harvi Sadhra of Hashtag Investing. Hashtag investing is an exclusive community for active investors to get real-time feedback and discover compelling stocks and strategies any time.

At the height of COVID-19, gaming stocks are making new highs. As the world is locked indoors due to the pandemic, more people are joining the gaming world.

While gaming stocks are typically not the type of high quality dividend growth stocks we cover on Sure Dividend, they have performed especially well as of late.

Gaming stocks like Zynga (ZNGA) and Activision Blizzard (ATVI) recovered from the March sell-off and rose more than 20% and 12% YTD (year-to-date), outperforming the S&P 500 Index, which fell 14%.

Welcome To The Lucrative World Of Gaming

Even before the pandemic, the video game industry was lucrative, growing 7.2% YoY (year-over-year) in 2019. Video games are gradually becoming the preferred form of entertainment. Data from Newzoo and Comscore shows that global video game revenue of $148.8 billion surpassed worldwide movie box office collection of $42.5 billion in 2019.

The significant change in the technology and business models of the gaming industry is driving growth. Video games have expanded beyond consoles to PCs and mobile. Thanks to high-speed internet, game developers have gone digital. Instead of buying video game packages, gamers can download games, subscribe to cloud gaming services, and make in-gaming purchases like new missions and player skins to enhance their gaming experience.

Similar to other physical sports, video games have sporting events called esports, where professional gamers compete in front of millions of viewers. According to Newzoo, 443 million people watched esports in 2019, and this number is expected to reach 495 million in 2020. The secret to succeeding in gaming is developing games that generate a loyal fan base for sequels, prequels, and merchandise goods.

2020 – A Good Year For Gaming

2020 is a good year for gaming stocks. We bring to you the top five NASDAQ gaming stocks which you should have in your portfolio. The stocks were selected based on their liquidity, growth, and fundamental strength.

Top Gaming Stock #1 – Activision Blizzard

Activision Blizzard is the world’s largest pure-play video game company with $6.5 billion in annual revenue and $51.8 billion market capitalization. It earns revenue by selling video games and services for game consoles (30%), PCs (26%), mobile devices (34%), and others (10%). Game services include in-game purchases and merchandise while the others segment includes proceeds from esports events.

Activision Blizzard has one of the most robust franchisee catalogs including World of Warcraft, Call of Duty, StarCraft and Bubble Witch, Diablo, and Overwatch. It earns 76% of its revenue from digital channels and 24% from retail and other sources. Activision Blizzard also broadcasts professional Overwatch matches on Disney’s (DIS)ABC networks, the Disney Channel, and ESPN.

In 2019, Activision Blizzard’s revenue fell 13.5% YoY, while its free cash flow rose 3.4% YoY to $1.7 billion. With a net cash position of ~$3.2 billion, it is well-placed to withstand the crisis and pay a dividend. The stock is making a new 52-week high of $67 amidst the pandemic.

Top Gaming Stock #2 – Electronic Arts

Electronic Arts (EA) is another video game giant with annual revenue of $5.5 billion and a market cap of $32.8 billion They offer games and services for consoles, mobile, and PC, and earn ~75% of revenue from digital channels. However, EA is more dominant in game console sales, earning 70% of its revenue from here. It earns 15% revenue each from PC and mobile games, and is witnessing increasing growth in mobile games.

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EA has some of the best sports game franchises like Madden NFL, NCAA Football, NBA Live, and FIFA, and it is monetizing these games on esports. It also has an exclusive agreement with Disney for the rights of the Star Wars franchise. The franchisee licenses limit EA’s scope for merchandise sales. Its largest source of revenue is live services like in-game purchases, extra content, subscriptions, and esports. EA plans to monetize its games like Apex Legends and Battlefield through esports.

EA has a stronger cash position than Activision Blizzard. EA generates a higher free cash flow of $1.76 billion and has a more substantial net cash position of $4.6 billion. Its stock rose 5.7% YTD to its 52-week high of $114.47.

Top Gaming Stock #3 – Take-Two Interactive

Unlike EA and ATVI, Take-Two Interactive (TTWO) is a smaller player with estimated annual revenue of $3 billion and a market cap of $14 billion. However, similar to EA, Take-Two has a larger exposure to game consoles, which contribute to 85% of its revenue. It earns the remaining 15% revenue from PC and other platforms. It has less exposure to esports but has the potential to expand.

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Take-Two’s biggest franchise Grand Theft Auto has the potential to become an esports game. Its other popular franchises include Red Dead Redemption, NBA 2K, and WWE 2K. Unlike EA that earns more than half its revenue from live services, Take-Two earns only 37% of its revenue from live services. Its major source of income is full game spending.

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Take-Two Interactive is estimated to have a free cash flow of over $500 million and a net cash position of over $2 billion in fiscal 2020.

Top Gaming Stock #4 – Zynga

Another smaller player in the video game space is Zynga (ZNGA), which widely caters to the mobile platform. All its mobile games are free and it earns most of its revenue from in-game purchases and other live services. Some of its biggest franchisees are Mege Dragons, Empire & Puzzles, and Slots. It draws 90% of its revenue from mobile and 10% from advertising.

In 2019, Zynga’s revenue rose 46% YoY to $1.32 billion, and free cash flow rose 52.5% to $239 million. It has a net cash position of $790 million. Zynga is a high-growth stock increasing 21% YTD and has a market cap of $7.12 billion.

Top Gaming Stock #5 – NetEase

Adding to the above four American companies is Beijing-based NetEase (NTES), which develops PC and mobile games and also distributes games of Activision and Microsoft’s Mojang in China. NetEase largely caters to China, Japan, and other Southeast Asian markets. It has franchises like Westward Journey, Knives Out, and Identity V. Apart from gaming, it offers other online services like advertising, email, e-commerce, and music streaming.

NetEase revenue rose 15% YoY to $8.4 billion and generated free cash flow of $1.95 billion in 2019. NTES stock rose 6.1% YTD and has a market cap of $46.2 billion.

Good Gaming Mix

The above list is a mix of large players such as ATVI, EA, and NTES, high growth stock ZNGA, and a mid-cap stock TTWO. ATVI, EA, and TTWO peaked in Q3 2018 and then came crashing down as China froze gaming license approvals. These three stocks performed in line with the S&P 500 Index in 2019. Now, they are on a growth spree and have the potential to reach their 2018 levels as the covid situation, and regulatory environment works in their favor.

On the other hand, ZNGA and NTES outperformed the market in 2019 and see strong growth momentum in 2020 as well.