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Ante Into These 7 Gambling Stocks

Divya Premkumar
·8 mins read

At the onset of the pandemic, gambling stocks tumbled downward with some companies losing as much as 50% of their revenue. The industry saw some of its biggest losses in decades as empty casinos became commonplace.

However, the dip in physical gambling was soon replaced by online gambling that emerged as the new face of the industry. Companies that once earned their revenue from casinos saw a major upside in online gambling. Many believe this sector will continue to thrive long after the pandemic as the potential for growth in this sector remains vast.

Although gambling stocks — just like the game — remain largely speculative, the return of major sports in the coming months is likely to be a boon for gambling companies. Here are seven stocks that you should hold on to:

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

  • Las Vegas Sands (NYSE:LVS)

  • MGM Resorts (NYSE:MGM)

  • Penn National Gaming (NASDAQ:PENN)

  • Wynn Resorts (NASDAQ:WYNN)

  • Caesars Entertainment (NASDAQ:CZR)

  • Boyd Gaming (NYSE:BYD)

  • Melco Resorts (NASDAQ:MLCO)

Las Vegas Sands (LVS)

a red sign with the Las Vegas Sands logo
a red sign with the Las Vegas Sands logo

Source: Andy Borysowski / Shutterstock.com

Las Vegas Sands holds the title as one of the highest valued gambling stocks in the world, and with good reason. Before the pandemic took its toll on this prosperous industry, the company’s global presence was a boon for its stock price.

Las Vegas Sands’ Q2 results were a dreary affair as casino closures led to a 14% decline in the company’s revenue. However, it wasn’t all bad news for the gaming company as earnings per share (EPS) improved by 39% during the year.

Although the earnings report was mostly a mixed bag, investors remain fairly bullish on the future of the company. Las Vegas Sands earns a majority of revenue from Asia, which was among the first regions to show early signs of recovery. As businesses reopen and travel picks up, it is likely that this gambling stock will be back to its glory days.

MGM Resorts (MGM)

A photo of the MGM logo on the MGM casino building.
A photo of the MGM logo on the MGM casino building.

Source: Michael Neil Thomas / Shutterstock.com

One of the biggest winners this earnings season was MGM, a gambling stock that has a major foothold in the U.S market. The company’s healthy financial resilience was reflective in its earnings which boasted a $4.8 billion cash position and EPS of $1.52 per share loss, beating Wall Street estimates.

Although losses were higher in a year over year comparison, the consensus on the report was mostly positive. Any doubts investors had on the viability of this investment were put to rest when Barry Diller announced a $1 billion investment (12% stake) in MGM Resorts. The news sent the company’s stock price soaring by 14%.

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.

Penn National Gaming (PENN)

Penn (PENN) National Gaming logo on the website homepage.
Penn (PENN) National Gaming logo on the website homepage.

Source: Casimiro PT / Shutterstock.com

A fan favorite gambling stock this season is Penn National Gaming. Although the company’s earnings this quarter were seemingly weak with corona-related closures, resulting in a lot of red ink on the books, the future prospects for the company are where its strengths lie.

Looking into the line of recovery, Penn’s physical casinos and have reopened across the country and are delivering results as expected. With a presence in over 19 states, the company is hoping for a swift comeback in the coming months.

The path to recovery will be bolstered by Penn’s promising new partnership with sports media company, Barstool Sports. The company’s core service will be featured on the new Barstool Sportsbook mobile app that will allow users to make bets online. According to the Motley Fool, nearly 62% of Barstool’s users gamble on sports, resulting in 41 million new users for Penn National Gaming.

While performance this quarter was anything but stellar, the future of this company is bright. With a multi-million dollar deal in the books and the reopening of physical casinos, we can expect some big thing from this gambling stock in the coming months.

Wynn Resorts (WYNN)

the Wynn resort in Las Vegas
the Wynn resort in Las Vegas

Source: Wangkun Jia / Shutterstock.com

While Wynn Resorts can’t match up to MGM’s success, the company is still one to watch as the gambling stocks gets their groove back. Wynn reported quarterly earnings earlier this month and the results were dim as expected. Revenue plunged nearly 95% and loss per share stood at $6.14.

The results rivaled those of its competitors after the industry saw a slow couple of months since the start of the year. However, Wynn’s stock price took a turn for the better after the release of visa-related news of Macau. The gambling stock’s price rallied 9.7% higher on Tuesday after the Chinese government announced that non-tourism visas to Macau from mainland China will be issued as well.

This is great news for Wynn Resorts as it owns major properties in this region. The decision to ease visa restrictions will result in a greater influx of tourists in the coming months and will accelerate the company’s path to recovery. Although gambling stocks have seen a lot of volatility this year, we recommend you stay invested in WYNN stock for its future returns.

Caesars Entertainment (CZR)

Caesar's Palace (CZR) in Las Vegas
Caesar's Palace (CZR) in Las Vegas

Source: Jason Patrick Ross/Shutterstock.com

Caesars is a household name in the gambling industry. The company swung a loss in Q2 with a majority of the properties closed through this period. While the news was troubling, investors remain bullish on the future of the company.

This optimism comes after Caesar’s recent acquisition by Eldorado Resorts. The newly formed company will operate under Caesar’s name but will be run by management at Eldorado. Experts believe that the merger will be fruitful in the long-term with Caesar’s national presence and Eldorado’s regional footprint. This could do wonders for the overall valuation of the company.

Caesars Entertainment may seem like a risky proposition right now, but with a successful merger under its belt, the gambling stock is a worthy pursuit for the long haul.

Boyd Gaming (BYD)

the Fremont Casino (BYD) representing gambling stocks
the Fremont Casino (BYD) representing gambling stocks

Source: Ken Wolter / Shutterstock.com

Much like the other gambling stocks on this list, Boyd Gaming reported a loss this quarter. According to Benzinga, the company’s EPS was 98 cents which was lower than the estimated $1.51.  Revenue was also lower by 75.2% in a year-over-year comparison at $209 million, but this was still higher than the estimated $131 million.

While the numbers aren’t encouraging, Boyd Gaming has put the worst behind them. The company took action in the early days of the pandemic to ensure its survival. It raised $600 million in cash with an 8.6% interest until 2025 while keeping its cash burn to a minimum.

As casinos start opening their doors, Boyd Gaming is likely to see some big gains in its future. The company also launched iGaming, an online sports betting platform and as major sports like baseball and football return, online sports betting will be a major revenue generator for the company.

I would recommend holding on to this gambling stock as casinos make their return in the coming months. While it is unlikely that we will see some immediate gains, the long-term prospects are definitely promising.

Melco Resorts (MLCO)

a woman smiling while using a slot machine in a casino. representing gambling stocks
a woman smiling while using a slot machine in a casino. representing gambling stocks

Source: Maridav/Shutterstock, Inc.

Melco Resorts operates a majority of its casinos in Europe and Asia, specifically, the Macau region. The company is yet to report its Q2 results and analysts expect losses much like its competitors. Total revenue is expected to decline by 81.4% according to Yahoo Finance. 

Although Q2 results are likely to be dim, Melco has taken the necessary steps to ensure that it weathers the Covid-19 storm with ease. The company has improved its liquidity position with a $1.2 billion cash balance and selling its ownership stake in Crown.

These indicators point towards a healthy financial future for the company despite the bleak Q2 predictions. The Chinese government has also eased visa restrictions in Macau to include tourist visas as well. This, coupled with the reopening of casinos in the region, will be a boon for Melco Resort’s stock price in the coming months.

Despite the gloom, this gambling stock is a worthy investment for its future potential.

Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020. As of this writing, Divya Premkumar did not own any of the aforementioned stocks.

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