2 Casino Stocks Wall Street Loves

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The ongoing U.S. mass vaccination drive bodes well for the tourism industry because the pent-up demand for travel is through the roof. With most travel and hospitality companies receiving huge, advanced bookings, brick-and-mortar casinos and related business segments are likely to soon see increasing foot traffic. This is why the casino management systems market is expected to grow at a 16.4% CAGR over the next five years to hit $13.7 Billion by 2025.

Furthermore, online gambling has gained in popularity since the onset of the pandemic as an alternative to brick-and-mortar casinos. This is evidenced by the VanEck Vectors Gaming ETF’s (BJK) 81.2% returns versus SPDR S&P 500 ETF’s (SPY) 45.3% over the past year.

Given this backdrop, Wall Street analysts expect casino stocks Penn National Gaming, Inc. (PENN) and Melco Resorts & Entertainment Limited (MLCO) to deliver solid returns in the coming months.

Penn National Gaming, Inc. (PENN)

PENN owns and manages gaming and racing properties, and operates video gaming terminals, with a focus on slot machine entertainment. The company operates through four segments: Northeast, South, West, and Midwest. As of December 31, 2020, the company owned, managed, or had ownership interests in 41 gaming and racing properties in 19 states.

On May 3, PENN established Penn Game Studios, an in-house content development team focused on creating exclusive iCasino content for its customers. To fuel this effort, PENN will be acquiring HitPoint Studios, Inc. and its spun-off real money gaming company, LuckyPoint Inc.

In March, PENN received a temporary permit from the Virginia Lottery to offer online sports betting through its Barstool Sportsbook mobile app in the Commonwealth of Virginia. The company hopes that both the acquisition and approval from Virginia lottery will  help it lead as the omni-channel provider of retail and interactive gaming, sports betting and entertainment.

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