Good times or bad times, gambling is one of the few sectors of the economy that continues to face all periods of economic boom and bust with equal vigor. Times have also proven that the industry is extremely flexible in adapting to new circumstances and even changing technology. If you don’t have any qualms about sin stocks, check out our list of the top 7 gambling stocks that you can invest in. These stocks have all the characteristics of great picks and come with some additional perks too.
1. Hilton Grand Vacations Inc. (HGV)
This is a very crucial moment for Hilton Grand Vacations Inc. since the company is being offered a deal from one of the largest private equity firms in the world, Apollo Global. The equity firm wants to merge Hilton Grand with Diamond Resorts, a company it previously acquired. Hilton Grand now has three options on the table- a tender offer, a merger deal, and a full buyout.
If the company chooses a merger, it will continue to be public. Though the deal is still major speculation, there are rumors that Apollo is willing to pay $36 per share. That would be a premium of $31 per share, a highly lucrative deal that could make give back multiple times returns to shareholders. Though rumor mills are running overtime on this deal, markets have already started responding to the news.
2. Wynn Resorts, Limited (WYNN)
After a spectacular performance in the second quarter, Wynn Resorts is riding high on the list of top gambling stocks. Though Q1 wasn’t a great time for the company, it bounced back in the three months ending June 2019 and reported a 9.5% increase in revenue per available room to $300. Occupancy in their rooms also increased by 2.5%.
Revenue in Las Vegas grew by 5.1%. Wynn Palace and Wynn Macau both experienced a jump in operating revenues. Overall, the total revenue went up by 3.3% to $1.66 billion. It is an interesting figure, given the fact that the global political climate isn’t too favorable.
3. Las Vegas Sands Corp. (LVS)
Las Vegas Sands Corp. is experiencing slower growth in Macau because of which the near-term outlook of the company is not very bright. According to the company’s Q2 earnings, Macau is turning out to be a dud for the casino operator. The revenue was $2.14 billion with an EBITDA of $765 million.
This slightly missed the revenue expectations of Wall Street. The company could be hit hard because of the US-China trade war, which has slowed down the Macau gaming industry considerably. However, if the two countries can find an agreement, the operator could be back on track more quickly.
4. Norwegian Cruise Line Holdings Ltd. (NCLH)
Norwegian Cruise Line Holdings operates cruise line brands along with casinos. If you are looking for a company that provides you with exposure to gambling as well as another interesting industry, then NCL should be your choice. Though insiders only hold a small portion of the company, you must note that they have sold some shares at a lower valuation compared to the market cost. This could be a bad signal, but in the long run, you may want to get into a more diversified stock.
5. Melco Resorts & Entertainment Limited (MLCO)
The City of Dreams operator reported its second-quarter results in 2019, marking a 17% increase in revenue quarter-on-quarter. The company’s revenue was majorly contributed to mass-market table games and rolling chip games. Melco Resorts & Entertainment brought a net income of $100.3 million, almost doubling their revenue of $57.3 million from Q2 2018. The company is still looking at Morpheus to bring more revenue alongside the City of Dreams.
6. MGM Resorts International (MGM)
If you are looking for an evergreen gambling stock, then MGM Resorts should be your first choice. The company didn’t gain much revenue advantage from its MGM Springfield casino resort in the first year of operations. For the period ending July 31, this casino could earn only $252.8 million, almost half of the projected revenue for the premises.
The company said that the revenue projections were from a much earlier time, and market landscape has changed since then. Overall, MGM is an old, reliable and established stock that you might add to your portfolios.
7. Penn National Gaming, Inc. (PENN)
The biggest advantage for Penn National Gaming right now is its push to become the leader in the sports betting industry. Ever since PASPA was struck down, the sports betting market in the US has grown by leaps and bounds.
The company will take advantage of the situation from September 1, when it starts the service at its Ameristar Casino East Chicago. The service is also on offer at Ameristar Casino Council Bluffs. Given its extensive presence in the US gambling scene, the company is strongly positioned to gain from the newly opened sports betting scene.
Conclusion
Though some people consider gambling stocks very risky for their portfolios, these are companies that are uniquely positioned to bring you consistent growth as well as an occasional chance to make massive profits. The well-diversified gambling companies are not just operating in several different geographical locations but also are engaging in different types of gambling- on-premise, online, slots, and sports betting. It is vital for an investor to understand that diversification is one of the saving graces of companies in the industry.
Gambling companies should always be added to your portfolio for their long-term prospect. Because of volatility in their earnings, looking only at the short-term prospect could often be a loss-making bet for you. For American-focused companies, you must definitely look at stocks that are willing to add sports betting to their portfolio. Several states are now trying to legalize sports betting in their jurisdictions because of which it would be worthwhile to invest in companies that are gearing up to fulfill the needs. Overall, do your research and only invest in companies that you find suitable for your portfolio.
Disclaimer: The author does not have any position in the stocks mentioned. Also, the author may not be a certified financial advisor, and the opinions expressed should not be treated as investment advice.
Buying and selling of securities carry the risk of monetary losses. Investors are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.
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