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Top Casino Stocks to Observe in 2024

Last Updated on 10 February, 2024 by Rejaul Karim

As the casino industry emerges from the shadows of the COVID-19 pandemic, investors are eyeing potential opportunities for growth and recovery. The second quarter of 2023 has seen remarkable developments in the casino stocks landscape, with several companies showing impressive performances.

Market Overview and Recovery

The casino industry is undergoing a robust recovery after the devastating impact of COVID-19 shutdowns. A prime indicator of this recovery is the VanEck Gaming ETF (BJK), which has surged by 28% in the past year, outpacing the Russell 1000 Index’s 7% climb.

Best Value Casino Stocks

For investors seeking value-based opportunities, three casino stocks stand out.

1. Light & Wonder Inc. (LNW):

Formerly known as Scientific Games Corporation, LNW specializes in designing gaming content for casinos and related businesses. The company’s recent debt reduction of 55% and strategic divestitures have positioned it for future growth. With a trailing P/E ratio of 1.6, LNW represents an appealing value proposition.

2. PENN Entertainment Inc. (PENN):

Known for its entertainment, sports content, and casino gaming services, PENN’s acquisition of Barstool Sports and successful reclassified lease components have led to a tenfold rise in net income in Q1 2023.

3. MGM Resorts International (MGM):

Operating gaming and entertainment resorts across the globe, MGM’s net revenue soared by over a third in the recent quarter. The company’s resurgence in leisure travel and its acquisition of the Cosmopolitan of Las Vegas have greatly contributed to its upward trajectory.

The company’s strategic partnerships, including its ties with the Entain Group, underscore its commitment to innovation and expansion. The Entain Group is a prominent gambling entity offering services across various platforms and countries. With flagship brands which include global names such as PartyCasino, the Entain Group has achieved global recognition.

Fastest-Growing Casino Stocks

Investors seeking growth opportunities should keep an eye on these casino stocks.

1. NeoGames SA (NGMS):

NeoGames is an Israeli technology company, that specialises in iLottery and iGaming solutions. A strong core lottery business and a strategic business combination with Aspire Global have propelled its revenue growth by a staggering 273.8%.

2. Las Vegas Sands Corp. (LVS):

A developer and operator of integrated resorts, LVS’s revenue has rebounded as leisure travel picked up in Singapore and Macau after COVID-19 restrictions were lifted. Despite facing challenges, LVS maintains a strong presence in the market.

3. VICI Properties Inc. (VICI):

As a casino and hotel real estate investment trust, VICI’s portfolio includes well-known properties like Caesars Palace Las Vegas and MGM Grand. With a doubled revenue in the latest quarter and strategic acquisitions, VICI showcases substantial growth potential.

Risks and Trends

Investors should remain cautious and aware of potential risks associated with casino stocks. These “sin stocks” can be vulnerable to negative publicity, regulatory changes, and shifts in public opinion.

On the other hand, promising trends are driving the casino industry’s growth. The global gambling market’s expansion, driven by the ubiquity of smartphones, increased spending power, and technological advancements like virtual reality and blockchain, presents exciting opportunities.

Conclusion

The second quarter of 2023 has brought about significant transformations in the casino industry, with various stocks demonstrating remarkable growth, momentum, and value. Investors looking to capitalize on the industry’s resurgence should carefully consider these top casino stocks, balancing potential rewards with the inherent risks.

FAQ

What are casino stocks, and how do they differ from other types of stocks?

Casino stocks represent shares in companies that operate in the casino and gaming industry. Unlike stocks in other sectors, casino stocks are influenced by factors such as gaming trends, regulatory changes, and economic conditions specific to the entertainment and hospitality industry.

What factors should investors consider before investing in casino stocks?

Before investing in casino stocks, consider factors like the company’s financial health, revenue sources (gaming, entertainment, hotels), regional regulatory environments, competition, and broader economic trends affecting consumer spending on leisure activities.

How do economic conditions impact casino stocks?

Economic conditions play a significant role in casino stocks. During economic downturns, consumer discretionary spending may decrease, affecting casino revenues. Conversely, in prosperous times, people may have more disposable income for entertainment, positively impacting casino stocks.

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