The economy is reopening and that means sports will soon be back in action. The only exception might be baseball as MLB owners refuse to open their books to the players, forcing a stalemate with no end in sight.
However, even if only three of the four major sports resume play, sports gambling stocks are sure to benefit. In particular, MGM Resorts (MGM), Penn National Gaming (PENN), DraftKings (DKNG), and Esports Entertainment Group (GMBL) could have a good chance of moving upwards in the months to come.
MGM Resorts (MGM)
Now that Las Vegas has reopened, it is time to consider the merits of Sin City’s top stocks. MGM is one such stock worthy of investor attention.
Nevada state gaming regulators have given the green light for MGM and its joint venture partner GVC holdings to implement a digital sports gambling operation in the Silver State. These two corporate behemoths already work hand-in-hand operating a mobile gambling platform in New Jersey dubbed Roar Digital. Furthermore, the tandem succeeded in launching the Bet MGM app this past fall. MGM also has a deal with Yahoo! Sports to connect MGM’s online sports gambling platform to Yahoo’s sports site.
MGM grades well in the POWR Ratings components across the board but for its Buy & Hold Grade and Industry Rank Grade. The stock is ranked #6 of 20 stocks in the Entertainment – Casinos/Gambling category. Look for MGM to move toward the analysts’ high forecast of $24 before year’s end, assuming the economy remains open.
Penn National Gaming (PENN)
Sports gambling, racing and video gaming terminal gambling will prove quite popular in the months ahead. PENN owns facilities that provide these exact offerings. PENN owns and operates properties with such gambling services throughout several regions, ensuring it won’t completely halt operations in the event of a concentrated outbreak of the coronavirus.
The analysts have set a high forecast of $45 for the stock, a reasonable feat should we enjoy a smooth economic reopening in the months ahead. The POWR Ratings have PENN ranked third of 20 stocks in the Entertainment – Casinos/Gambling segment, highlighted by an A Peer Grade and a B Trade Grade. Furthermore, PENN’s price returns are in the green across all time frames in the past half-decade.
Fantasy sports have been popular for years yet there are precious few ways for the public to invest in the companies that own and operate fantasy sports platforms. Enter DKNG.
DKNG specializes in daily and weekly fantasy sports as opposed to season-long contests that are quickly losing favor amongst fantasy players. A single injury to a star player has the potential to ruin a season-long fantasy sports team, ultimately making daily and weekly contests that much more appealing.
DKNG recently announced it will provide members with a live video streaming service of sports events, giving prospective fantasy players even more reason to play on DKNG’s website and app. The average analyst price target for DKNG is $43.29, meaning there is upwards of 8% upside. UFC 249 and recent golf tournaments have proven uber-popular on the DKNG platform, indicating there is immense pent-up demand for sports-related gambling.
Though those in the Generation Z age cohort are just as interested in esports as conventional sports, DKNG should trend upward in the months and years ahead simply because those with the most discretionary income (Baby Boomers, Generation X and older millennials) are obsessed with sports.
Esports Entertainment Group (GMBL)
GMBL was one of the top-gainers on Monday, June 15. The stock soared without clear justification. Though GMBL added a couple new executives to its brass earlier this month, no one is quite sure what else is garnering such a significant uptick in investor interest. If you are looking for a long-term sports gambling play, this might be the stock for you.
GMBL provides esports enthusiasts with the opportunity to wager on esports competitions. Though esports fans in the United States are not allowed to wager on the GMBL platform due to legal restrictions, laws have the potential to change. However, GMBL is short on cash and there is minimal interest in esports wagering at the current moment.
If you believe members of the Generation Z age cohort and young millennials will eventually favor esports gambling as opposed to regular sports gambling, you should give serious consideration to adding GMBL to your “buy it and forget it” portfolio.
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DKNG shares were trading at $40.57 per share on Tuesday afternoon, down $1.22 (-2.92%). Year-to-date, DKNG has gained 279.16%, versus a -2.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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