TipRanks
Time to Bet on These 3 Sports Betting Stocks, Say Analysts
Sin stocks – mainly alcohol, tobacco, and gambling – may carry a bad reputation, but they are big business and can bring solid returns to investors. And, in an important piece of news that happened last week, the State of New York has officially legalized online sports betting. The gaming outline was included in the state’s regular budget proposal, as the legislature saw legalized sports betting as a vehicle for increased tax revenue. Governor Cuomo signed the bill. Included in New York’s outline for bringing online sports betting into play are provisions for platform providers to bid on acquiring the two available legal applications. The selected providers will pay a one-time fee to the state of $25 million each, and their operations will be subject to a minimum tax rate of 13%. Terms of the bill will allow betting on both professional and college sports, as long as no New York college is involved in the actual sporting event. New York’s bill is an important step in an overall trend toward more legalized gambling in the US. More than two dozen states now have legal sports betting – although in many, bets have to be placed in person. Moving the service online, as New York is doing, is the next step, and has been taken by 14 states. The trend makes online betting providers a natural target for investors interested in legal gaming, and the companies that offer it. Using the TipRanks platform, we’ve looked up three such stocks for which some Street analysts are projecting strong growth over the next 12 months. Here are the details. Penn National Gaming (PENN) The first gaming stock we’re looking at, Penn National, got its start in the horse racing business in the 1960s, and has since expanded to become a major gaming operator in 19 states, where it controls 41 gaming and racing properties. Penn also owns slot machine video gaming terminals, and offers live sports betting in Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Pennsylvania, and West Virginia. Penn has 36% ownership stake in Barstool Sports, and uses that company’s media to leverage its own interactive betting products. Penn’s network, which includes 48,000 gaming machines, 1,300 table games, and 8,800 hotel rooms, taps into a casino audience of 20 million customers, along with Barstool’s online audience of 66 million customers. So Penn has scale going for it, in a big way. That has helped the company to weather the pandemic storm in 2020, even though COVID-related closures had a heavy impact on revenues and earnings. For 4Q20, the company reported over $1.03 billion at the top line, down 23% year-over-year, along with an EPS of 7 cents per share. While revenues were down, the EPS compared well with the prior year’s 80-cent loss. Subsequently, the stock has surged ~400% over the past 12…
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