When the Philadelphia Eagles and the Kansas City Chiefs kick off on Super Bowl Sunday in Glendale, Arizona, on Feb. 12, the National Football League’s Lombardi Trophy won’t be the only reward on the line. Super Bowl gamblers will also be hoping for a big “W” to cap off the professional football season, and in big numbers, too.
A record 50.4 million Americans are expected to bet a total of $16 billion on Super Bowl LVII this weekend, according to a Feb. 7 release from the American Gaming Association. That’s a 61% increase over AGA’s estimates for the 2022 NFL championship game between the Los Angeles Rams and the Cincinnati Bengals.
[Sign up for stock news with our Invested newsletter.]
With many states climbing onto the burgeoning U.S. sports betting bandwagon, these select gambling stocks are emerging from the pack, and could be a good bet for stock market investors:
— Penn Entertainment Inc. (ticker: PENN)
— DraftKings Inc. (DKNG)
— Flutter Entertainment PLC (PDYPY)
— Churchill Downs Inc. (CHDN)
— Caesars Entertainment Inc. (CZR)
— MGM Resorts International (MGM)
— Boyd Gaming Corp. (BYD)
Penn Entertainment Inc. (PENN)
This regional gambling operator not only holds a 50% ownership stake in the popular digital sports and entertainment platform Barstool Sports, but it also runs 43 casino and racetrack properties across the U.S. Penn is expected to complete its full acquisition of Barstool in February. PENN stock is already up 15.8% on a year-to-date basis through Feb. 7 after a rough 2022 (down 42.7% for the year) and is gaining traction with industry analysts. JMP Securities analyst Jordan Bender has reiterated his “buy” rating on PENN and has set a price target of $45 per share.
DraftKings Inc. (DKNG)
Like Penn Entertainment, DraftKings couldn’t get rolling in 2022, as its share price fell a whopping 58.5%. Also like Penn, DraftKings’ stock price is on the rise in early 2023, up 53.9% through Feb. 7. DKNG already operates in 22 U.S. states, but three large states — Florida, California and Texas — still have not green-lit legalized sports betting, and those states may not do so for years. Down the road, however, non-gambling states represent a massive growth opportunity, with the potential for millions of new customer sign-ups for DraftKings betting. DraftKings executives appear to believe in the stock, with insiders purchasing 1 million shares of DKNG stock since December 2022.
Flutter Entertainment PLC (PDYPY)
This Dublin, Ireland-based sports betting leader owns some of the top brand names in the gambling sector, including FanDuel, PaddyPower and PokerStars. PDYPY offers investors more pricing stability compared with Penn Entertainment and DraftKings, with the stock up 3.6% over the past year and up 14.1% on a year-to-date basis through Feb. 7. Flutter plans to spin off FanDuel and list it on major U.S. exchanges in 2023, once it ties up some financial loose ends with Fox Corp. (FOXA), which won the right to purchase an 18.6% stake in FanDuel in November. If Flutter is able to work out the kinks, the spinoff should prove profitable, given that FanDuel had positive earnings before interest, taxes, depreciation and amortization, or EBITDA, in the last few quarters and should end fiscal year 2023 firmly in the black.
Churchill Downs Inc. (CHDN)
Churchill Downs conjures up visions of photo finishes and mint juleps, but it isn’t just the home of the Kentucky Derby; it’s also a big sports betting and online casino platform. Analysts are high on CHDN, with Susquehanna reiterating its “positive” rating on the company and hiking its price target from $250 to $280 in January. At CHDN’s price of $252.13 per share as of Feb. 7, that represents an 11.1% uptick in performance. A November 2022 deal with DraftKings to produce a joint horse-racing mobile betting app may sweeten the pot for investors in Churchill Downs. CHDN stock is up 19.2% on a year-to-date basis as of Feb. 7.
Caesars Entertainment Inc. (CZR)
This fabled Las Vegas casino owner now operates 50 casinos across the U.S. and owns the Caesars Sportsbook app. The company is back on its feet after casinos were largely shut down during the pandemic, with ample support from industry analysts in early 2023. On Jan. 31, Deutsche Bank held its “buy” rating on Caesars and set a price target of $70 for its shares, up from $64. With CZR trading at $54.90 as of Feb. 7, the stock appears to have plenty of upside. Caesars is cashing in on a big Las Vegas comeback, especially with conventions returning to the gambling and tourist mecca. In the third quarter of 2022, CZR reported a boost in hotel occupancy to 93.6% along with stronger gambling, dining and beverage volumes. The company’s brand should sparkle after its deal to rename the New Orleans Superdome to “Caesars Superdome,” and with new partnership deals with ESPN and CBS Sports to be their “exclusive odds provider.”
MGM Resorts International (MGM)
Like Caesars, MGM should benefit from the Las Vegas renaissance, with more trade groups and business conferences landing on the Vegas strip in 2023. The company is also well positioned in online sports gambling with its BetMGM sports betting division, which accounts for 30% of the total U.S. digital casino and online poker market, and a 13% share of the U.S. sports betting market. BetMGM also reported a 51% boost on a state-by-state basis in its digital gaming operations, which should lift profits given the burgeoning popularity of online gaming across the U.S. Analysts are bullish on Las Vegas in general, and MGM in particular. For example, research firm Hedgeye called Vegas’ fundamentals “very bullish” in mid-January, and it put MGM on its new “long ideas” list, citing promising Las Vegas convention planning and visitation trends.
Boyd Gaming Corp. (BYD)
Boyd operates 28 gaming properties in 10 U.S. states and is gaining higher visibility thanks to its sports betting and online gaming partnership with FanDuel. Shares closed at $66.45 on Feb. 7, but Credit Suisse recently gave BYD an “outperform” rating with a price target of $82. Boyd reported a company record for fourth-quarter revenues of nearly $923 million, compared with a consensus analyst estimate of $853 million. Quarterly top-line revenue increased 4.9% year over year. Boyd appears to be a good deal right now, as its shares are trading at 11.3 times earnings. That compares nicely with the price-earnings ratios of industry peers such as Penn Entertainment, which is trading at nearly 25 times earnings. BYD stock is up 21.9% year to date as of Feb. 7.
More from U.S. News
7 Stocks That Outperform in a Recession
7 of the Best Blockchain Stocks to Buy
7 of the Best Sports Betting Stocks to Watch originally appeared on usnews.com
