Some gaming companies are well-positioned for a strong 2024; In this article, we highlight some of the best gaming stocks for the coming year. [Image: Shutterstock.com]
There’s a lot to look forward to in 2024
As the new year begins, many people are looking ahead to see what opportunities 2024 could bring. They may strive to become healthier, achieve a better work-life balance, and improve their financial situation.
many interesting investment opportunities
The global gambling industry offers many interesting investment opportunities for individuals who want to invest some money in the market.
There has never been a time when legal gambling has been so widespread and many companies have benefited from its popularity. This article looks at three gambling-related stocks you should add to your portfolio.
Note: These are just the author’s thoughts, not an official investment recommendation.
1. MGM Resorts International
MGM Resorts International (NYSE: MGM) is a giant of the global casino industry. In addition to having more than a dozen properties across the U.S., the company is one of six licensees able to operate in Macau. After struggling with the pandemic, the world’s largest gaming hub is now recovering strongly: MGM China’s net sales reached $813 million in the third quarter of 2023, up 10% compared to the same period in 2019.
MGM has freed up funds in recent years to focus more on what it’s good at – investing in exciting new gaming projects. Because of this, the company has sold the underlying real estate assets of many of its U.S. properties.
The Las Vegas-based company is in the process of developing Japan’s first-ever casino resort. The Osaka property is scheduled to open in 2030. Once operational, it is expected to generate up to $4 billion in annual revenue.
a leading candidate to receive one of New York’s coveted casino licenses
MGM is also a leading candidate to secure one of New York City’s coveted casino licenses. It seems almost guaranteed that the existing Empire City Casino in Yonkers will receive approval to expand its current offerings. Downstate casinos could generate over $2 billion in revenue per year, justifying the hefty $500 million license fee.
MGM’s co-ownership of online gaming brand BetMGM is also proving fruitful, with the operator expecting to generate core profits of $500 million in 2026. BetMGM is the third largest online gaming operator in the United States in terms of market share.
Overall, MGM Resorts looks like a good buy at its current price. It has great upside potential and has been buying back shares in recent years, so management clearly believes the company is undervalued.
2. Las Vegas Sands
Since the death of Las Vegas Sands (NYSE: LVS) founder Sheldon Adelson in January 2021, the company has undergone some significant changes. Since selling The Venetian, Palazzo and Venetian Expo Center for $6.25 billion in February 2022, the company no longer has any real estate in Sin City.
One of the main focuses is on the Asian market. It owns the Marina Bay Sands in Singapore, one of only two casino resorts in the country. The company recently completed a $1 billion upgrade of its hotel facilities and will spend another $3.3 billion to build a fourth tower. The property’s third-quarter sales were $1 billion last year.
LVS is also a major player in Macau, has five properties and generated nearly $1.8 billion in revenue from all of them in the third quarter of 2023.
proposed developing a resort on Long Island
LVS is constantly looking for potential new markets. It has proposed developing a resort on Long Island, but with a dozen large companies vying for one of three licenses, the chances aren’t great.
And while casino gambling isn’t legal in Texas, things could be improving. LVS has spent millions in recent years lobbying lawmakers to green light commercial casinos in the state, and it looks like that plan is making good progress. LVS owner Miriam Adelson is purchasing a majority stake in the NBA’s Dallas Mavericks, which could be a hint of things to come.
A company affiliated with LVS also purchased enough land in July to build a casino near the Dallas Cowboys and Texas Rangers stadiums. Typically there’s no smoke without fire, so LVS is well-positioned when major Texas cities get the all-clear to open casinos.
With its strong presence in the Asian market and some potentially large projects on the horizon, LVS appears to be a smart investment at the current price.
3. Development
Live dealer games have been the fastest growing online casino segment for several years. These titles create a realistic gaming environment where real people deal cards and spin the roulette wheel. You can follow all the action via a live stream and even have the opportunity to interact with the dealer and your fellow players.
Evolution Gaming Group (OMX: EVO) is by far the market leader in this space, with studios around the world. It now covers more than 15 different languages and is targeting relatively untapped markets, with the company opening its second studio in Latin America in the third quarter of 2023. It’s aimed at high-rollers and small-stakes players alike, while the sleek features offered in the 100+ language games keep people coming back for more.
Evolution works with over 600 online casino operators and numerous land-based casinos.
The company also diversified its revenue by purchasing NetEnt in 2020 for about $2.1 billion. The company now has major casino game developers such as Red Tiger Gaming, Big Time Gaming and NoLimit City under its roof.
The company’s main problem is that it is struggling to keep up with demand for its games. This is a good problem to have and more resources are being invested in recruiting and new studios. Given its strong earnings and cash reserves, Evolution has ample opportunity to do this and continue to generate an impressive margin.
Even though it doesn’t look like Evolution’s share price will rise quickly, a steady and reliable upward trend is expected over time. It has strong competitive advantages that make it more stable than many other companies in the global gaming space.
