3 Gambling Stocks Ready to Ride Golden Nugget's Victory
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There’s been a spate of mergers and acquisitions among gambling stocks this year, with one of the most high-profile deals announced on Aug. 9.
That was when fantasy sports and online gambling operator DraftKings (NASDAQ:DKNG) announced it would acquire Golden Nugget Online Gaming (NASDAQ:GNOG) for $1.56 billion in an all-stock deal. Golden Nugget shareholders will receive 0.365 shares of DraftKings stock, which puts the offer at a 53% premium to Golden Nugget’s share price at the time the deal was announced.
Once the deal closes, it will give DraftKings an additional 5 million customers and boost its iGaming online casino business, helping to diversify its offering beyond sports betting. Golden Nugget on the news.
The announcement of the DraftKings/Golden Nugget deal has given the entire gambling sector a buzz and lifted the share prices of several other gambling companies. Here are three gambling stocks ready to ride Golden Nugget’s victory to bigger gains.
- Penn National Gaming (NASDAQ:PENN)
- Flutter Entertainment (OTCMKTS:PDYPY)
- Caesars Entertainment (NASDAQ:CZR)
Gambling Stocks to Buy: Penn National Gaming (PENN)
Wyomissing, Pennsylvania-based Penn National Gaming is one of the largest operators of casinos and racetracks in North America with 44 facilities across the U.S. and Canada. The company also has a minority stake in sports-betting company Barstool Sports.
Founded in 1972, Penn National Gaming today has a market capitalization of $16 billion, and continues to operate primarily video gambling terminals, live racetracks and, increasingly, online casinos and sports betting.
While Penn National Gaming was hoping that the Barstool Sports brand, which it invested $163 million in last year (2020), would give its business and stock price a boost, that hasn’t happened yet. Year-to-date, PENN stock is down 17% .
The company is still hoping to leverage acquisitions to drive future growth, recently announcing that it is acquiring Canadian sports betting company Score Media and Gaming for $2 billion.
Flutter Entertainment (PDYPY)
Irish bookmaker Flutter Entertainment is hardly a household name or a well-known brand in the U.S. But with a market capitalization of $36 billion, the company is one of the largest online betting and gaming companies in the world.
And Flutter Entertainment does own several well-known online gambling brands, notably PokerStars and FanDuel. Currently, FanDuel is second only to DraftKings when it comes to online betting on sports. Popular properties such as PokerStars and FanDuel propelled Flutter’s revenue 27% higher and its earnings per share 19% higher in 2020.
While Flutter stock trades over the counter in the U.S., its stock might be an attractive option for investors looking for exposure to online gambling. FLTR stock certainly presents a buy-the-dip opportunity at its current price. Year-to-date the stock is down 7%.
The company is hoping to benefit from a more normal sports calendar this year and has said that its business got a boost this summer from the European Football Championship.
Gambling Stocks to Buy: Caesars Entertainment (CZR)
One of the oldest and most reputable names in the gambling industry is Caesars Entertainment. A classic, old-school casino and resort operator, Caesars today runs more than 50 casinos and hotels.
Founded back in 1937, Caesars now has a market capitalization of $20 billion. And while resorts and casinos remain the company’s bread and butter, it too is pushing into sports betting, having just completed its $3.7 billion takeover of sports betting company William Hill.
CZR stock is the best performing of the companies on this list. Year-to-date, Caesars Entertainment’s stock is up 14%. In the past year, the share price has risen 100% having ridden momentum tied to the economic reopening and rebound in travel and leisure spending.
While the company has more than $3.5 billion of debt on its balance sheet, it has taken steps to get back in the black with the sale last year of three properties, which netted it $385 million in proceeds.
On the date of publication, Joel Baglole held a long position in DKNG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
