For Immediate Release
Chicago, IL – September 29, 2020 – Zacks Equity Research Shares of Molson Coors Beverage Company TAP as the Bull of the Day, SkyWest, Inc. SKYW as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Penn National Gaming, Inc. PENN, Churchill Downs Incorporated CHDN and Red Rock Resorts, Inc. RRR.
Here is a synopsis of all five stocks:
Bull of the Day:
The initial knee-jerk reaction to COVID was to sell everything. It didn’t really matter what industry a stock was in, it sold off. When the market collectively came to its senses, anyone buying the lows obviously looked like a genius. Now that markets are sitting precariously near key technical levels, it is going to get a bit tougher. The easy money has already been made. Investors are going to have to step up their game and find stocks which can make it in the long run.
One way of ensuring you are doing that, is by buying stocks which have strong earnings trends. With strong earnings growth, stocks have solid foundations to build on. One way to find these types of stocks is to lean on the power of the Zacks Rank. Stocks with strong Zacks Ranks have seen recent upside earnings estimate revisions coming from analysts.
Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) Molson Coors. Molson Coors Beverage Company manufactures, markets, and sells beer and other malt beverage products in the United States, Canada, Europe, and internationally.
The Beverages – Alcohol industry is in the Top 36% of our Zacks Industry Rank. Over the last sixty days, six analysts have increased earnings estimates for the current year, while seven have done so for next year. The bullish impact on the Zacks Consensus Estimate has pushed up the current year number from $2.73 to $3.69 while next year’s number is up from $3.36 to $3.72.
Bear of the Day:
The cloud of negativity which was weighing down on Wall Street the last couple of weeks feels like it is beginning to dissipate. Looking across the market, I see all sorts of stocks in the green. It is more than just a stock here and there, it’s entire industries which are beginning to rally. That could lead investors into a false sense of security, buying any stock that’s on the move. It is more important now than ever to make sure the stocks you pick have strong underlying earnings trends. That way, if the market does chop around or go deeper into a future correction, you have some downside protection. At the end of the day, it’s all about profits.
One way to make sure the stock you are thinking of buying has a strong earnings trend is by leaning on the Zacks Rank. Stocks which are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks have strong earnings trends. Stocks with Zacks Rank #4 (Sell) and Zacks Rank #5 (Strong Sell) ranks have weaker earnings trends.
Today’s Bear of the Day is a stock that has fallen out of the good graces of the Zacks Rank. I’m talking about Zacks Rank #5 (Strong Sell) SkyWest.
It doesn’t take this article to realize that the airline industry has been suffering. A year ago, SkyWest posted $6.25 EPS. The current year Zacks Consensus Estimate comes in at 46 cents. That’s an earnings contraction of 92.64%. Next year’s number has come down as well. Over the last sixty days, four analysts have cut their earnings estimates for next year. That has dropped the Zacks Consensus Estimate for next year from $4.37 to $3.58. As bad as the 92% contraction for this year sounds, next year’s return to growth should be comforting for investors. The $3.58 represents growth of 677%.
The Airlines industry is in the Bottom 6% of our Zacks Industry Rank.
3 Industry-Beating Casino Stocks to Buy Amid the Pandemic
From commercial casinos to sportsbooks, every part of the casino industry has been affected by the coronavirus pandemic. Although the majority of the casinos have reopened, traffic continues to be dismal.
Nonetheless, with increased focus on streamlining of cost structures along with optimization of business processes, the industry on a whole has shown some resilience. Notably, companies are focusing on the levels of services and staffing with selective amenities along with enhanced safety and social-distancing protocols in the gaming floor to welcome gamers.
Moreover, with the legalization of sports betting in several states, players are now able to place bets through digital platforms. Some of the popular igaming applications are DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch. Markedly, the applications have been an important medium for gamers to connect, learn and inspire amid the stay-at-home restrictions.
iGaming Business Model a Driving Factor
Although the majority of the casinos have reopened with safety protocols, gaming revenues are still very low in comparison to the pre-pandemic levels. In such a scenario, companies are surviving by focusing more on iGaming business operations. Per the American Gaming Association, iGaming revenues have surged 253.6% in July and 199.7% over the first seven months of 2020.
As implementation of the latest technology is likely to drive revenues, many companies are investing heavily in digital initiatives to improve reliability and customer services.
All these positive factors have helped the Zacks Gaming industry grow 39.6% in the past six months compared with the S&P 500’s rally of 25.4%.
Investing in the gaming sector might sound profitable right now. It is worth noting that the industry is currently at the top 41% (with the rank of 103) of the 250 Zacks industries, which hints at further growth.
3 Solid Picks
Here, we have highlighted three stocks that have not only performed better than the industry over the past six months but also boast solid prospects.
Penn National Gaming: Penn National is an American operator of casinos and racetracks. Founded in 1982, the stock carries a Zacks Rank #2 (Buy). The stock has returned 499.1% in the past six months compared with the industry’s 39.6% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In terms of the digital platform, the company recently launched its Barstool Sportsbook mobile app in Pennsylvania. Also, the company’s Hollywood-branded real money iCasino continues to drive revenues. Despite the pandemic, the company is optimistic about the Barstool Sports collaboration with regard to organic customer acquisition and cross-sell opportunities. Notably, the Zacks Consensus Estimate for the company’s current-year earnings has been revised 15.3% upward in the past 60 days.
Churchill Downs: Churchill Downs is a racing, online wagering and gaming entertainment company that primarily operates in Louisville, KY. The company currently carries a Zacks Rank #1. The stock has returned 69.7% in the past six months, compared with the industry’s 39.6% growth.
The company recently gained approval for the launch of its first sports betting mobile app in Illinois. Further, the company is in talks to build the new Waukegan Casino in partnership with Rush Street Gaming. Meanwhile, it anticipates launching its retail and online BetAmerica Sportsbook in Colorado and Michigan prior to the year-end, followed by expansion plans in Tennessee by 2021. Nonetheless, the company is focused on sports betting and iGaming business combined with its horse racing wagering platform over the long term. Earnings estimates for 2020 have moved up 4.5% over the past 60 days, depicting analyst optimism regarding the stock’s growth potential.
Red Rock Resorts: This gaming development and management company primarily operates in Las Vegas. The stock carries a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has been revised 36.4% upward in the past 60 days. On a year-over-year basis, its earnings estimates for 2021 indicate year-over-year growth of 103.9%. The stock has returned 84% in the past six months compared with the industry’s 39.6% growth.
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Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
Churchill Downs, Incorporated (CHDN) : Free Stock Analysis Report
Penn National Gaming, Inc. (PENN) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Red Rock Resorts, Inc. (RRR) : Free Stock Analysis Report
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