Casino stocks faced important headwinds successful fiscal twelvemonth 2020 with the pandemic impacting land-based casino operations. However, the worst seems to beryllium over.
Last month, the Centers for Disease Control and Prevention (CDC) issued guidance to unbend travel for individuals who person been afloat vaccinated.
A caller study suggests that the United States is averaging 2.7 cardinal vaccine shots per day. In bulk of the states, fractional of the adults person been jabbed. It’s precise apt that a immense bulk of the adults volition beryllium vaccinated successful the adjacent six months.
Considering the vaccine efficacy, U.S. is apt to witnessed accelerated GDP maturation with implicit re-opening of the economy. A John Hopkins (Bloomberg School of Public Health) study suggests that “people are bushed of making drastic changes to their mundane lives and forgoing things that are important to them… .”
It goes without saying that question and leisure are large accent busters. Thus, the pent-up request for these activities is bully quality for casinos and casino stocks. In the coming quarters, it’s precise apt that casinos volition commencement operating astatine afloat capacity. This volition construe into top-line and currency travel growth.
Overall, casino stocks person already been successful an uptrend with astir companies pursuing omni-channel maturation strategy. And with casinos and edifice openings, I judge that the affirmative momentum volition sustain.
With each of that successful mind, these 3 casino stocks are worthy considering.
- Penn National Gaming (NASDAQ:PENN)
- Bally’s Corporation (NYSE:BALY)
- Boyd Gaming (NYSE:BYD)
Now, let’s dive successful and instrumentality a person look astatine each one.
Casino Stocks To Buy: Penn National Gaming (PENN)
PENN banal has surged by 484% implicit the past year. However, year-to-date, the banal has remained mostly sideways — up conscionable 5%. That said, this seems similar a bully accidental to buy.
Needham precocious started sum connected the stock with a terms people of $151. This would connote an upside of 67% from existent levels of $90.40.
One crushed for being bullish connected Penn National is the company’s omni-channel capabilities. In fiscal twelvemonth 2020, the institution acquired 36% involvement successful Barstool Sports. With online sports betting and iGaming marketplace gaining traction, the institution is well-positioned to benefit.
However, the company’s 41 properties crossed 19 states stay the cardinal gross and currency travel driver. It’s worthy noting that for FY2020, the institution reported operating currency travel (OCF) of $338.8 million. OCF remained affirmative adjacent with closure of properties owed to the pandemic. Cash flows are apt to accelerate successful the coming twelvemonth and successful FY2022 arsenic concern operations instrumentality to normal.
Penn is scheduled to study Q1 results for FY2021 connected May 6. This is simply a imaginable trigger for renewed upside successful the stock. And with beardown fundamentals and increasing omni-channel capabilities, PENN banal is among the apical casino stocks to consider.
Bally’s Corporation (BALY)
With Bally Casinos and Bally Interactive, the institution has besides been moving towards creating omni-channel gross capabilities. Given the large imaginable successful the online sports betting and iGaming segment, it’s not astonishing that BALY banal has surged.
However, astatine a guardant price-earnings ratio (P/E) of 40.3, determination seems to beryllium imaginable for further upside. In particular, astatine a clip erstwhile land-based casinos are apt to present amended numbers successful the coming quarters.
Bally has pursued an acquisition strategy to grow its casino network. In the past 2 years, the institution has acquired 7 properties. Furthermore, the institution has 3 pending acquisitions that are expected to adjacent successful mid-2021. Acquisitions volition adhd to the company’s maturation momentum erstwhile casinos are afloat operational (100% capableness allowed).
It’s besides worthy noting that the institution is readying a $650 cardinal satellite people casino and resort successful Richmond, Virginia. The edifice is apt to span 1.6 cardinal full quadrate feet and volition see casino, hotel, sportsbook, pool, eating and retail outlet.
Therefore, with ambitious casino maturation plans coupled with maturation successful the iGaming market, BALY banal looks attractive. The institution believes that the U.S. sports betting and iGaming marketplace is apt to beryllium worthy $50 cardinal creation maturity. Therefore, determination is ample headroom for maturation successful the coming years.
Casino Stocks To Buy: Boyd Gaming (BYD)
BYD banal is different sanction among casino stocks to consider. The banal has already delivered steadfast returns of 317% successful the past year. However, astatine a guardant P/E of 24.2, the banal continues to look attractive.
Recently, the institution reported Q1 2021 results. With improved economical conditions coupled with vaccinations against Covid-19, the institution witnessed higher “visitation and increasing spend-per-visit crossed each lawsuit segment.” The institution achieved an all-time grounds for adjusted EBITDA and operating margin.
As vaccinations proceed and the economical outlook improves further, the institution is good positioned for growth. Besides gaming, the institution has besides witnessed maturation successful request for “non-gaming amenities and increasing request for edifice capacity from some rated and unrated customers.” This is apt to guarantee that coming 4th numbers are beardown successful presumption of top-line and cardinal margins.
Currently, the institution is operating 28 gaming properties successful 10 states. In addition, the institution has besides commenced operation of Wilton Rancheria Tribe’s edifice adjacent Sacramento, California. The casino volition person 2,000 slot machines and 80 array games and operations volition commence successful the 2nd fractional of FY2022.
In the online segment, Boyd launched the archetypal Stardust-branded online casinos successful New Jersey and Pennsylvania. Furthermore, FanDuel Sportsbook and Casino App are already disposable successful in New Jersey, Pennsylvania and Michigan. Therefore, maturation successful onshore properties coupled with iGaming is apt to guarantee steadfast growth.