The 5 Best Casino Stocks To Invest In

There are several major casino company stocks trading publicly
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Casino stocks sound like a risky market, but actually you’re gambling on the company not the roulette wheel. Most of the publicly available casino company stocks are quite mature. As such, they are unlikely to completely crash, yet sudden and exponential growth is also not on the cards any time soon. 

With mature companies churning out healthy cashflow, casinos stocks often perform well in terms of dividends, with additional growth a welcome bonus. This article explores the potential of investing in casino stock.

Investing in Casino Stocks

 

As with any investment, you should always do your own research and exercise due diligence before investing at a pace that you can afford. Use wise strategies and follow investment advice to maximise your efforts and potential returns. 

There are two major markets in the casino industry; the USA and Macau. Of course, there are many other companies also in operation throughout Europe, the UK and elsewhere around the world, but the major companies on the casino stocks lists focus their efforts, and achieve their revenues, from Vegas and Macau. 

As such, any change in those markets drastically affects the value of casino shares. Bad business on the Vegas Strip could tumble prices, as could crackdowns in China and the trade war with the US.
 

Las Vegas Sands 
 

First up on the list, Las Vegas Sands (LVS) is the leading operator for casino gaming in the US and Macau. Around 64% of the company’s revenue comes from Macau, so earnings tumbled in 2015 – 2016 when the Chinese gaming market took a turn. The company has since recovered well, but any events concerning the Chinese economy could create more volatility. 

What’s great about the Las Vegas Sands stock is that it stands up well fundamentally. The company has seen decent growth, and currently has cashflow of around $5 billion per year, allowing for a generous 5.5% dividend on shares. 

Potential growth comes from Sands’ expected entry into the Japanese market over the next few years, along with expansion in Macau and at the Marina Bay Sands in Singapore. 

Earnings per share could grow 5% annually over the next five years, giving a 9.8% average return. It’s difficult to call the growth rate given the current plateau, yet Las Vegas Sands, the cash-generating machine that it is, makes a great dividend stock with good potential for long term growth.

Wynn Resorts

 

Wynn Resorts (WYNN) operates several major casino resorts in Las Vegas and Macau. With around 74% of the company’s revenue coming from the Asian market, the Wynn stock comes with some of the same conditions as Sands. The value is highly dependent on what happens in terms of regulations or instabilities in China and the strength of the market in Macau. 

It’s been a wobbly year for Wynn. Although they benefit from diverse income streams from non-gaming activities such as entertainment, accommodation and dining, the company has recently had share value decreases and revenue dips. 

Despite this, the opening of the Encore Wynn Resort in Las Vegas, and the upcoming Crystal Pavilion in Macau contribute to a well-rounded growth strategy that could bring around 4% increase in annual earnings per share. 

The share price for Wynn stood at $200 at the peak of its last bull run, but entered 2019 on a rapid decline before bottoming out at around $104. As it stands, the price is still only $110, so despite warnings on revenue decreases this could represent a low price to buy in. The share currently offers around 3.7% dividends. 

The value of stocks such as Wynn and Las Vegas Sands is highly dependent on the Macau gaming market
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MGM Resorts 

 

MGM Resorts (MGM) operate casinos and hotels in both the USA and China, though this company see 81% of their revenue come from the US market. This means that MGM continued to perform relatively well when their competitors crashed due to downturns in the Macau market, and the stock has been steadily gaining value since 2009. 

However, like all potential investments, MGM is not without problems or risk. The company has shown poor performance records of losses and debts, with interest expenses taking up nearly half of operating expenses. 

MGM shares currently offer a low 1.8% dividend, with a high price-earnings ratio of 83.58 indicating that the cost of the share is high relative to the amount gained. The stock has also been on a short term bear. 

However, MGM represents a lower risk proposition at $27 a share (Sept 2019). A one-year target of $33.56 gives the share an 18.5% premium, so this is possibly an investment that could grow as a slow burner. A hold rating works for this given the current situation. 
 

888 Holdings PLC 

 

This selection is for an online casino stock. 888 Holdings (EIHDF) is quickly becoming an established leader in the online gaming industry, with casino, poker, bingo and sports betting markets all operating smoothly in the UK, as well as New Jersey, Malta, Ireland and Gibraltar, with negotiations currently underway for additional markets. 

The company has recently rebranded and redesigned their offerings, and is expecting to see major growth in the sports betting market in upcoming years. The share price currently stands at £149, with a 12-month low of £126 and high of £239 suggesting the stock is currently available at a low price. 

The company has shown consistent earnings and $86.7 million profit before tax in 2018, an 11% rise from 2017. 888 Holdings has been given a buy rating by experts, and could be the one to watch for the online space. 
 

Gaming and Leisure Properties 

 

The final recommendation on the list is not really a casino company, but a casino real estate and financing company - Gaming and Leisure Properties (GLPI). It’s good to diversify your investment portfolio, and this is one way that you can do so while still investing in the casino space. 

Gaming and Leisure Properties own 44 casino properties, as well as operating two casinos and providing financing to casino companies. The company’s shares are currently valued at around $38, with a 52-week low of $31 and high of $40 with a long term bullish curve. 

As a real estate investment trust (REIT), the company pays out 90% of what it earns. This means dividends on the shares are incredibly high at 7.1%. 

Disclaimer: This article is not intended as investment advice. Always do your own research and make your own decisions, or seek professional opinions and advice if needed.