Investors looking to buy gaming and gambling stocks on the cheap may have the opportunity to finally do so as JMP is offering what it believes to be a number-backed analysis into some worthwhile stock purchases.
Naming the Winners Hidden in Plain Sight
While the bank refrains from giving overly-optimistic prognoses, it has good reasons to believe that a number of stocks, including those of Rush Street Interactive, MGM Resorts International, Golden Entertainment Inc, DraftKings Inc, and Penn National Gaming Inc, will end up going up.
JMP Securities analyst Jordan Bender has laid his arguments bear for anyone to see. His idea is basically that all aspects of the gambling market are still suppressed from the pandemic. Changing legislation across the United States is set to improve this.
For example, the online sports betting and iGaming markets ramp should reach a gross gaming revenue of $39 billion by 2030, compared to gross gaming revenue of $8.1 billion today. This is a significant increase in the overall numbers and if true, it would make the assets quite worthwhile to buy.
More youth-driven and innovation-focused brands are the likely winners, with Penn’s casino and Barstool Sportsbook set to remain particularly popular with younger generations. BetMGM on the other hand remains the market leader in online gaming and it’s likely to retain this status. Bender explained:
We believe a combination of BetMGM’s omni-channel, with 37 million database members, along with Entain’s market-leading technology positions it ahead of the competition.JMP Securities analyst Jordan Bender
Specialist and Tech-Driven Strategies Not Bad
The analyst even sees reason to invest in more narrowly-focused companies and their stock, such as Golden Entertainment, which is focused exclusively on Nevada, but still seems to be doing well. Bender called the state one of America’s healthiest markets. Volatility should not be an issue, he added.
DraftKings is another favorite and a brand that is worth investing in since it would present investors with an opportunity to purchase stock in a company that is committed to dominating the sector. DraftKings will surely benefit from the further expansion of the market, especially since the company is well-positioned with its own technology, and not least, the acquisition of SBTech.
As a reminder, though, DraftKings is unlikely to turn a profit in the next couple of years, which will make the stock more volatile and prone to swings in value.