The US stock market is far from settled. Last week, we endured days of dire drops followed by surging gains.
Whether it’s fears over what will happen on Capitol Hill, the direction of US bond yields or what might happen over at the Federal Reserve, stock traders just can seem to get a good read on the right line to place their trades from one day to the next.
But what if you could be in a market and a top stock that is above the fray of the ups and downs of the general stock market… A stock that doesn’t need to care as much about the other fears that seem to be hitting stocks on any given day.
One of the markets that always draws eager customers during economic boom or not so boom times – and doesn’t need to worry about what the bond yields are doing or what is being debated on the House or Senate floors – is betting and gaming.
In the US, folks like a flutter or a bet as a distraction or just plain old entertainment. And this is the case across all sorts of demographics. This makes it both an opportunity and a defensive market regardless of what happens in the general stock market.
This is the sort of market sector that our chief technician, Josh Martinez, has been researching in Josh’s Top 5 recently given the ups and downs in stocks.
And right now, there’s a company that has a long-proven history of success and sustaining that success through the thick and thin of the US economy for many, many decades.
The Proven Bet to Make Now
Penn National Gaming (PENN) is the Wyomissing, Pennsylvania-based company that got its start in better facilities at the storied Philadelphia Park racetrack. And it is a proven performer and market adapter with its track record of shareholder-focus going back into the 1970’s.
Back then, playing the ponies was one of the prime outlets for gaming. But the founders quickly worked the legal systems in various states to expand its capabilities and locations for horse racing and other gaming opportunities.
Fast forward to today, and the company has racing and casino properties around the nation and increasingly has online betting apps and sites. It has also been in investment and acquisition mode to expand its physical location and online reach for a bigger rake.
The $2 billion dollar deal for Canada-based Score Media & Gaming (SCR) will be generating a tremendous amount of additional gaming revenue and brings the company into the Canadian market.
And its deal to grab a 36% stake in New York-based Barstool Sports will bring online sports betting capability and revenue from 10 states that will be showing up in Penn National’s fourth quarter revenue of this year.
Revenue from onsite casinos and sports facilities was indeed impacted by lockdowns, but that is rapidly being reversed. And with the surge in online gaming revenue with both legal reforms by localities as well as its own expansion and acquisition, activity is showing up now.
The last quarter showed a massive surge in revenue gain by 405.99%. This revenue surge, with more pending, will go far for the profitability turnaround for the company.
Penn National Gaming Quarterly Revenue Growth -- Source: Bloomberg
But the company shows heavy cash generating capabilities that are only getting better. And even with lots of its own leverage with debt, it covers the vigorish with aplomb.
The stock has been a reasonable performer for some years. And then even with the drop in early 2020, it has been roaring back to show an overall return for the trailing five years of 470.00%, for an annual equivalent return of 41.58%.
But we’re not focused on the past – we’re focused on the coming weeks. And the deals in Canada and New York will be driving more awareness for the company and its stock (on top of the revenue gains).
Penn National Gaming Price -- Source: Dow Jones
It is not alone in the betting market, and this means that the pullback in the shares reflects the competition in the stock market from other competitors. But again, note the new deals now and pending that will be big for the company and the stock.
Josh is looking for Penn National Gaming to hit the researched target price of $81.76. From the current price of around $73.78, it represents a potential cash gain on the shares of 10.82% for a short-term trade.
As always, I want to hear from you as an Insider here at Traders Agency.
This includes your thoughts on our work here and what we should be covering and how to improve our services to you.
I can be reached directly at [email protected].
All my best,
P.S. Josh Martinez works tirelessly to find the top stocks from the top sectors for the best trades right now. This includes the big gaming and sports betting market that is on a roll right now.
These are the sorts of stocks that he presents each and every week inside of his research service, Josh’s Top 5.
To see how he selects the top stocks each week, we have a special session set up to watch on demand right now, which you can access for free by clicking here.