Although the next couple of months are going to be rough, the intermediate-term picture continues to improve especially with positive vaccine results. This is a boost for many sectors as the economy will be in the midst of a rebound and society on its way back to normalcy. Casino stocks will be one big winner.
There is going to be massive, pent-up demand for people to go out and socialize. All sorts of travel stocks will likely see massive profits and increased pricing power including casinos.
The following four gambling stocks are likely to rebound in 2021 thanks to the upcoming dispersal of one or several coronavirus vaccines: Las Vegas Sands Corp (LVS), Caesars Entertainment Corporation (CZR), Penn National Gaming (PENN), and Boyd Gaming Corporation (BYD).
Las Vegas Sands Corp (LVS)
Las Vegas has an egregiously high unemployment rate, few visitors, and a spike in crime. Though Sin City’s outlook looks quite dreary at the moment, the widespread use of an effective coronavirus vaccine could dramatically change the city’s fate. LVS has several properties throughout Las Vegas including the Las Vegas Expo and Convention Center. The company also owns properties in other countries including Macao.
LVS's POWR Ratings are highlighted by a "B" Trade Grade component. The stock is ranked 12th of 22 stocks in the Entertainment - Casinos/Gambling category. The only question is how long it will take for people to feel comfortable walking through a crowded casino. If that time comes this spring, LVS could easily hit its pre-virus trading level of $70 to $75.
Furthermore, there is a chance LVS will sell some of its properties to pay off its nearly $14 billion debt load. If LVS uses the proceeds to enter the Japanese market, the stock should pop.
Caesars Entertainment Corporation (CZR)
Casinos, entertainment, resorts, and fun. This is the business of CZR. CZR properties include Caesars, Harrah’s Eldorado, and Horseshoe. The POWR Ratings show CZR has "A" grades in the Buy & Hold Grade and Trade Grade components along with "B" grades in the Peer Grade component.
CZR is ranked first of 22 stocks in the Entertainment - Casinos/Gambling category. Of the eight analysts who have studied CZR, five consider it a “Buy”, three consider it a “Hold” and none advise selling. The mere fact that CZR has steadily climbed back to its pre-virus price level of $12 to $14 is a positive sign.
CZR is currently in the midst of relaunching live entertainment. Furthermore, the company has a partnership with ESPN and recently announced plans to purchase the popular sportsbook William Hill. Buy CZR before the vaccine is released, hold the stock through the return to normal and you should make a profit.
Penn National Gaming (PENN)
PENN owns and manages racing and gaming facilities. The company’s video terminals, slot machines, and horse race wagering offerings are quite popular. PENN is also attractive in the sense that its operations are spread out across several geographic locations, meaning it has the potential to make money in several locations even if the virus is wreaking havoc in other parts of the country.
The POWR Ratings reveal PENN has "A" ratings in the Buy & Hold Trade and Peer Grade components. PENN is ranked second of more than 20 publicly traded companies in the Entertainment - Casinos/Gambling sector.
The top analysts insist PENN is undervalued and it is more appropriately priced at $76.73, meaning there is nearly 10% upside. Add in the fact that PENN has Barstool Sports at its service (36% ownership stake) to catalyze growth and it becomes increasingly clear the sky is the limit for this stock.
Boyd Gaming Corporation (BYD)
BYD is a multi-jurisdictional gaming business headquartered in Sin City. The company has gaming entertainment operations in nearly a dozen states. In total, BYD owns and operates 29 properties.
About one-quarter of BYD revenue stems from Las Vegas locals, meaning it is not as vulnerable as its competitors to the reduction in Vegas tourism stemming from the pandemic. The POWR Ratings show BYD has "A" grades in the Trade Grade, Peer Grade, and Buy & Hold Grade components. BYD is ranked third of 22 stocks in the Entertainment - Casinos/Gambling category.
Of the 11 analysts who have performed a deep dive into BYD, one might consider it to be a "Buy", three consider it a "Hold" and none advise selling. The average price target for the stock is $41, meaning it has nearly 7% upside.
BYD beat analyst estimates when reporting quarterly revenue this past October. It is clear BYD's relationship with FanDuel is helping the company profit from sports gambling. In fact, BYD might be worth holding long after the pandemic ends. Seize the opportunity to add this gaming stock to your portfolio today, hold it across posterity and you will be quite pleased with the return.
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LVS shares were trading at $56.78 per share on Tuesday morning, up $1.07 (+1.92%). Year-to-date, LVS has declined -16.12%, versus a 15.71% 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.4 Gambling Stocks to Buy for a 2021 Rebound appeared first on StockNews.com