The name Penn National Gaming (NASDAQ:PENN) might not be familiar to you. If so, this would be a great time to learn about its strong turnaround potential. The eventual resolution to the novel coronavirus will produce some big winners. PENN stock is likely one of them.
Penn National Gaming owns around 50,500 gaming machines along with 1,300 table games, which makes it a major player in the gaming market.
Although PENN stock has had a bit of a rough road earlier this year, it has recovered somewhat after bottoming out in March. Yet, it’s still less than half of what it was in mid-February. There’s a bargain here for investors who are willing to ignore short-term fluctuations in the share price. Taking a long-term view of the company’s prospects for recovery, traders should discover a hidden gem here.
More Than Slot Machines
It’s tempting to envision Penn National Gaming as just the king of slot machines. Granted, the company has plenty of slot machines. However, there’s more to Penn National Gaming than that.
Specifically, the company “also offers social online gaming through its Penn Interactive Ventures division and has leading customer loyalty programs with over five million active customers.”
This is a crucial part of Penn National Gaming’s value proposition as the coronovirus crisis has forced many people to stay at home. When there is a resolution to the crisis, people will venture out and seek social entertainment once again. Until that happens, though, online gaming will likely remain very popular.
Penn National Gaming provides online gaming through both mobile-enabled and desktop apps. The associated online-gaming brand names are HollywoodCasino.com, HollywoodRaces.com and Viva Slots. In total, these brands “offer more than 100 of the most exciting online Vegas-style slots that can be played for free on any device and easy wagering for horse racing online respectively.”
Great companies can adapt to changing circumstances. Penn National Gaming has proven its ability and willingness to provide online-gaming services while stay-at-home mandates are in effect.
This is how communities are built along with brand loyalty. In a locked-down world, Penn National Gaming is well-situated to profit and thereby provide value to shareholders.
Playing the Game to Win
In that same vein, Penn National Gaming made a big move into the world of “digital sports media” with a value-added deal. In particular, the company jumped headfirst into online sports gaming, when it agreed to acquire a 36% interest in Barstool Sports.
For around $163 million in cash and convertible preferred stock shares, Penn National Gaming “will be Barstool Sports’ exclusive gaming partner for up to 40 years.” It will also “have the sole right to utilize the Barstool Sports brand for all of the Company’s online and retail sports betting and iCasino products.”
Offering dynamic content is key to profiting long term in the digital-gaming niche. Penn National Gaming’s $163 million will be money well spent as Barstool Sports will expand the company’s already considerable footprint in the online-gaming space.
As Barstool Sports Founder Dave Portnoy notes, his company “has a deep sports and gaming history.” Providing online sports betting can be extremely lucrative. Barstool Sports is the perfect target for Penn National Gaming’s expansion efforts during the coronavirus crisis and afterwards.
Ultimately, what Penn National Gaming stands to gain from this agreement is a loyal and built-in consumer base from Barstool Sports. Even when the economy does recover, this is a clientele that’s likely to continue playing Barstool Sports’ line of enjoyably addictive games.
The Final Word on PENN Stock
You might not be into online gaming, but you don’t have to be to believe in the upside potential of PENN stock. National and worldwide lockdown mandates could actually benefit the digital gaming market.
The deal with Barstool Sports makes PENN stock, which is already a bargain, even more attractive to prospective shareholders. In other words, it’s an investment worth betting on.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.