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Following the Supreme Court’s decision to end a federal ban on state gambling statutes, gambling stocks now offer investors huge gains in short periods of time.
After that recommendation, the stock surged 107% thanks to a takeover bid from a Rhode Island casino operator.
The Supreme Court’s decision set off a wave of mergers and acquisitions across the industry.
States including Pennsylvania, New Jersey, and New York moved to legalize sports gambling and tap into the accompanying windfall of tax revenue.
Hotels and casinos from Las Vegas to Atlantic City bolstered their sports gaming operations by tapping into new technologies and platforms to boost and handle the increasing volume of bets.
Still, most investors have ignored these trends.
And, as I’m about to reveal today, one of the industry’s top picks is trading at a confounding discount. If you want to make big gains in 2019, look no further than this gambling stock.
Here’s how I identified one of the best stocks to buy today…
This Is the Best Gambling Stock to Buy Today
Earlier this week, I noted that I use the Money Morning Stock VQScore™ to identify opportunities that few others see. The VQScore takes the entire universe of profitable companies and assigns each stock a score based on its potential to breakout in the future.
A score above 4 puts the stock in the “Buy Zone.” On Wednesday, I looked at the list of 560 companies with scores at 4.45 and above. And I was shocked when I saw one of my favorite gaming companies in the world: Las Vegas casino operator Boyd Gaming Corp. (NYSE: BYD).
The company operates 29 casinos across 10 states. Its stock has pulled back from June 2018 highs in the upper $30 range. Now trading at an excellent level around $31, we’re talking about a stock that could easily double in the next 12 months.
Boyd Gaming is a regional gaming company based in Nevada. It’s best known for operating the Eldorado Casino in Henderson, Nev., and the Fremont Casino in Las Vegas. The firm also has three race courses and a massive vacation property in Hawaii (charter flights from Vegas and all).
The broader gaming market experienced weakness over the last six months, highlighted mainly by worries about the Chinese economy. Regional players like Boyd Gaming were in the ship when the market went down.
But the stock has battled back in recent weeks.
Last Friday, shares popped 12% after the firm reported strong earnings.
Boyd reported earnings per share of $0.32, a figure that beat expectations by $0.01. More importantly, revenue came in at $791.62 million, which represented growth of 33% year over year.
Naturally, analysts cheered that the company has seen impressive growth from its Nevada properties.
But as the CEO noted during the firm’s conference call, its growth potential is even bigger thanks to its strategic coverage of the United States. With regional casinos in 10 states, the firm caters to 36% of the U.S. population. The company’s Midwest and South segments reported EBITDAR growth for the third consecutive quarter.
Now, the real hook here is sports betting. Right now, the company operates sports betting in two states, Nevada and Mississippi.
But during the conference call last week, the company discussed a significant development that I think would bring it $1 billion in revenue during the same quarter next year. The firm struck a $200 million strategic deal with MGM Resorts that is a game changer for the industry.
Through the deal, the companies will be able to offer sports gaming in up to 15 states (and roughly 40% of the population). We’re talking about properties in Nevada, Maryland, Massachusetts, Michigan, Mississippi, New York, Illinois, Indiana, Iowa, Kansas, Louisiana, Pennsylvania, Ohio, Missouri, and New Jersey.
Put simply, MGM and Boyd are poised to take over the sports betting world.
And that’s on top of Boyd’s other partnership with FanDuel to bolster its sports gaming operations in New Jersey and Pennsylvania.
Right now, Boyd Gaming has a consensus one-year price target of $37.80. That figure represents a potential upside of 22.3% from Wednesday’s closing price. Nomura analyst Harry Curtis projects that the stock will grow to $48 per share, a 55% rise.
But Wall Street isn’t paying attention to Boyd’s total upside. With a VQScore of 4.45 and a screaming “Buy” signal, we’re talking about a stock that could easily double and then triple once it brings its full sports gambling plan to fruition.
— Garrett Baldwin
Source: Money Morning