Built by Traders, for Traders

The Top Stock for Gaming the Market

Online gaming is a huge market that’s on a roll. Gone are the days when folks seeking to enjoy games of chance or skill had to venture out or fly out to casinos. And sure, plenty still enjoy doing this – but even more are happy to do it online or on their mobile devices.

Then, there’s betting on sporting events. Again, gone are the days of tracking down local bookies or having to travel to visit physical sports book venues. Betting on favorite teams and players is just a click away.

And the success of online gaming shows up in how well the business is doing and in turn driving more bets on the leading stocks in this industry.

indeX Online Betting Index Price Performance — Source: indeX & Bloomberg

A leading newer index of online betting enterprises from indeX shows how the house is really the big winner in this betting business. The index has gained 304.70% from March 2020 to now – showing that the house always wins. And now it is winning at an even bigger pace.

This week, we’re presenting a new trade from Top 5 to bet on the house.

We continue to be on a roll in Top 5 with the average return on our hit stock trades at 7.43% for a total gain for hit trades running at 423.79%. And for the stock option alternatives presented for many of the stocks, the average gain for hit trades is running at 42.30%.

These returns add up and can compound to amount to four-figure returns over the year. And the additional proof comes from last week’s limit up hits for other Top 5 stocks, including AstraZenaca (AZN) and Salesforce (CRM).

The Market Bet to Make Now

For this week, we’re entering the betting market with a leading company with roots going back to the 1970s.

Penn National Gaming (PENN) is the Wyomissing, Pennsylvania-based company that got its start in better facilities at the storied Philadelphia Park racetrack.

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: Bloomberg

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.

That makes Penn National Gaming a top stock for this week – and it’s representative of what you’ll continue to get from us inside Top 5 each week.

The Trades to Make for Penn National Gaming

The trade to make for Penn National Gaming is to buy the shares at market and hold it for the target price of $81.76.

From the current price of around $75.40, that represents a potential cash gain on the shares of 8.44% for a short-term trade.

This is a great opportunity for a quick gain right now, as Penn National Gaming is a top stock to buy right now in Josh’s Top 5.

Keep on trading,

Josh Martinez

Editor, Josh’s Top 5

P.S. This is a great pick, but it’s still only one out of my Top 5. To find out about the rest of the trades I’m recommending, complete with specific entry and exit points, you need to click here and join me on the Top 5 journey…