In this article, we will be looking at the 5 best casino stocks to Invest In. If you want to see our detailed analysis of the casino industry, you can go directly to the 15 Best Casino Stocks to Invest In.
5. DraftKings Inc. (NASDAQ: DKNG)
Number of Hedge Fund Holders: 43
DraftKings Inc. (NASDAQ: DKNG) is an online casino and sports-betting operator. The company is the first legal sports betting operator in New Jersey and also has operations in West Virginia, Pennsylvania, and Indiana. It offers its customers daily sports contests to win money and benefits. The company ranks fifth on our list of the best casino stocks to invest in.
In Q1 2021, DraftKings Inc. (NASDAQ: DKNG) beat on revenue. The company reported a 175% year-over-year revenue growth at $312 million, driven by new launches in Michigan and Virginia. 1.5 million monthly unique paying customers engaged with the company in the first quarter. The average revenue per monthly unique paying customer increased by 48% at $61, compared with the prior-year quarter. Due to the strong earnings, DraftKings Inc. (NASDAQ: DKNG) raised its guidance for the fiscal year 2021 to $1.05 billion-$1.15 billion. The company also expects the resumption of normal sports activities. The DKNG stock gained over 51.3% in the past year. In June, Jeffries raised its price target on DKNG stock, rating it as a ‘Buy’.
At the end of Q1 2021, 43 hedge funds have stakes in DraftKings Inc. (NASDAQ: DKNG), worth $966 million. ARK Investment Management is the biggest shareholder of the company with 4.3 million shares, worth $268.3 million.
Alger, an investment management firm, released its Q1 2021 investor letter and mentioned DraftKings Inc. (NASDAQ: DKNG) in it. Here is what the firm has to say:
“DraftKings Inc. was among the top contributors to performance. DraftKings is an online gaming operator. Its legacy Daily Fantasy Sports (DFS) allows users to virtually draft teams of players from professional sports leagues and potentially earn a payout based on how athletes perform. DraftKings Online Sports Betting (OSB) involves the company taking wagers or bets from customers on sporting events. Draft Kings’ third offering, Online Casino (iGaming), involves customers betting real money when playing casino games like slots and blackjack online. DFS is legal across most states, while approximately 25% of the population has access to OSB and approximately 10% has access to iGaming.
DraftKings recently hosted a bullish analyst day during which it increased its total addressable market estimate to approximately $65 billion if OSB and iGaming become legal in all states. At the same time, it raised its long-term revenue estimate to $5.4 billion and earnings before interest, taxes, depreciation and amortization to $1.78, an approximately 40% increase for both. It also discussed very strong customer retention. We believe DraftKings continues to be a great executor of its business strategy and it beat consensus revenues by nearly 40% for its most recent quarter. Online gaming is a very exciting market, and the monthly state numbers show that iGaming and OSB revenues/wagers continue to be very robust. Additionally,
DraftKings’ market share is strong with OSB and iGaming representing approximately 30%and 20%, respectively, of their markets. The potential for Canada and various U.S. states such as New York, Connecticut and Ohio to legalize sports betting over the coming months could result in a multi-billion dollar revenue market.”
4. Wynn Resorts, Limited (NASDAQ: WYNN)
Number of Hedge Fund Holders: 49
Wynn Resorts, Limited (NASDAQ: WYNN) ranks fourth on our list of the best casino stocks to invest in. It is an American hotel and casino company based in Las Vegas, Nevada. The company has over 22 five-star hotels, restaurants, and spas located worldwide. It is the recipient of several Forbes Travel Guide Five-Star Awards. Earlier in May, the company announced the plan for an independent gaming company, Wynn Interactive, with Austerlitz Acquisition Corporation.
In Q1 2021, Wynn Resorts, Limited (NASDAQ: WYNN) reported a net income of $268 million and an EPS of -$2.41. The revenue for the quarter was recorded at $725.7 million, $516.2 million of which was generated through casinos. The entertainment segment accounted for $64.8 million of the total revenue. The WYNN stock gained over 56.9% in the past year. According to Bernstein, Wynn Interactive could certainly benefit the company because of its strong customer base in the U.S. Moreover, many analysts have upgraded the WYNN stock, including Morgan Stanley, Citi, etc.
Of the 866 hedge funds tracked by Insider Monkey, 49 funds have positions in Wynn Resorts, Limited (NASDAQ: WYNN), worth $1.7 billion.
3. Las Vegas Sands Corp. (NYSE: LVS)
Number of Hedge Fund Holders: 62
Las Vegas Sands Corp. (NYSE: LVS) is a Nevada-based casino and gaming company with 8 properties in the U.S. and Asia. The is famous among tourists because of the wide range of facilities, including gaming, entertainment, dining, exhibitions, as well as museums. Las Vegas Sands Corp. (NYSE: LVS) has recently opened a $4.3 billion worth Resort World Las Vegas, which has over 3,500 rooms and a large theatre.
In Q1 2021, Las Vegas Sands Corp. (NYSE: LVS) reported a net income of $192 million, up from $65 million during the same period last year. The EPS for the quarter stood at -$0.25, in line with the market consensus. The company generated over $1.19 billion in revenue, driven by Macau’s gaming segment. The LVS stock has gained over 12.4% in the past year. Since 2012, Las Vegas Sands Corp. (NYSE: LVS) has returned over $23.4 billion to shareholders through dividends and shares repurchases. In April, Credit Suisse raised its price target on LVS stock from $58 to $69, with an ‘Outperform’ rating, due to the growth prospects at its Macau and Singapore properties.
At the end of Q1 2021, 62 hedge funds tracked by Insider Monkey have positions in Las Vegas Sands Corp. (NYSE: LVS), worth $2.4 billion. With 5.5 million shares, worth $334 million, Melvin Capital Management is the leading shareholder in the company.
Like Bally’s Corporation (NYSE: BALY), Red Rock Resorts, Inc. (NASDAQ: RRR), and Penn National Gaming, Inc. (NASDAQ: PENN), Las Vegas Sands Corp. (NYSE: LVS) is one of the best casino stocks to invest in.
2. MGM Resorts International (NYSE: MGM)
Number of Hedge Fund Holders: 57
MGM Resorts International (NYSE: MGM) is a leading entertainment company headquartered in Las Vegas, Nevada. The company owns over 29 hotels and casinos in many U.S. states such as Mississippi, Massachusetts, New Jersey, Maryland, etc., as well as Macau. Recently, the company has announced its acquisition of Infinity World’s remaining 50% stake in CityCenter Holdings for $2.1 billion. It ranks second on our list of the best casino stocks to invest in.
MGM Resorts International (NYSE: MGM) reported strong earnings for Q1 2021 due to the Las Vegas Strip recovery and increasing casino demand. The company reported net earnings of $332 million and an EPS of -$0.69, beating the market estimate by $0.16. MGM China saw a 9% increase in revenues at $296 million. The company announced a quarterly dividend of $0.0025 per share and paid over $119 million to shareholders in its stock repurchase plan. In the past year, the shares of MGM stock have soared by 151.9% and 35.7% year to date. Earlier, JP Morgan also raised its price target on the stock to $52 due to the Las Vegas Strip revenues returning to 2019 levels.
As of Q1 2021, we see that hedge funds are turning bullish on MGM Resorts International (NYSE: MGM), as 57 hedge funds have positions in the company, compared with 44 in the previous quarter. Corvex Capital is the largest shareholder of the company with over 15.6 million shares, worth $595 million.
Longleaf Partners Fund recently published its first-quarter 2021 investor letter and mentioned MGM Resorts International (NYSE: MGM) and other stocks in it. Here is what the firm has to say:
“MGM (21%, 1.44%), the casino and online gaming company, also contributed to the Fund’s strong returns. MGM’s Las Vegas properties performed particularly well during the fourth quarter, with October marking the best month since pre-COVID February, positive quarterly EBITDA and strong 2021 bookings. MGM’s online gaming and sportsbetting app, BetMGM, is one of the leaders in US online gaming, with a better market share in the more profitable iGaming than in the higher profile but lower margin sports gaming. MGM has demonstrated high conversion rates of its hotel guests and we believe that, with Barry Diller’s help, they will build a competitive long-term advantage with lower customer acquisition costs. MGM’s Macau subsidiary, MGM China, also appreciated as the Macau market partially reopened. We believe there is significant additional upside for the Macau business over the medium-to-long term.”
1. Caesars Entertainment, Inc. (NASDAQ: CZR)
Number of Hedge Fund Holders: 76
Caesars Entertainment, Inc. (NASDAQ: CZR) tops our list of the best casino stocks to invest in. It is an American casino, gaming, and hotel company, based in Nevada. The company has over 50 casinos worldwide and offers the largest loyalty program in the industry. It also offers unique shopping, entertainment, dining, and accommodation experience to the customers.
In Q1 2021, Caesars Entertainment, Inc. (NASDAQ: CZR) reported a net income of $548 million, up 33.7% from $410 million during the same period last year. The company generated $1.7 billion in revenue, compared with $473 million in the prior-year quarter. The Las Vegas casinos and restaurants accounted for $497 of the total revenue. The CZR stock has delivered a 130.9% return to shareholders in the past year. Recently, many investment banks raised their price target on CZR stock, including JP Morgan, KeyBanc, Deutsche Bank, etc. JP Morgan raised its price target on CZR to $129, with an ‘Overweight’ rating.
At the end of Q1 2021, 76 hedge funds tracked by Insider Monkey have positions in Caesars Entertainment, Inc. (NASDAQ: CZR), up from 71 in the previous quarter. The total value of these stakes is $1.5 billion.
You can also take a peek at 10 Best Sports Betting Stocks to Buy Now and 10 Best Las Vegas Stocks to Buy Now.
