If you tend to think of the stock market as a big casino, you might be partially right as luck is indeed a factor. But it doesn’t take a gambling mind-set to see that Penn National Gaming’s (NASDAQ:PENN) PENN stock is poised for a full recovery in the near future.
It can’t be denied that the spread of the novel coronavirus has had an impact on the share price. The recovery in PENN stock has been swift and sharp, though. Clearly, the shareholders are anticipating better times ahead. Stringent social-distancing guidelines won’t last forever. We’re social creatures and people want to be entertained, after all.
Penn National Gaming will participate in the return to relative normalcy, and so will the company’s shareholders. Even with the first-quarter crash in PENN stock, the shares can still have a tremendous 2020 for patient investors.
PENN Stock Reopening the Path to Profitability
Penn National Gaming’s business model relies, at least in part, on its casino facilities. If people are out gambling, it’s going to be more difficult for the company to turn a profit.
Fortunately for PENN stockholders, American is slowly but surely moving towards a reopening of its gambling businesses. State by state, regulators are easing shelter-in-place restrictions and business restrictions.
This means that Penn National Gaming can get back to the business of collecting gamblers’ hard-earned money. Take the state of Louisiana, for example. The company reopened five of its casino properties in that state on May 18. That represents 25% of Penn National Gaming’s portfolio of regional casino assets.
Just that news alone caused a 13% pop in the PENN stock price. There are plenty more areas that could reopen in the coming weeks and months. As more regions ease their restrictions, PENN shareholders could quickly bid up the price of the stock.
On top of that, Penn National Gaming recently announced that the company plans to reopen five of its properties in the state of Mississippi. Of course this is great news, but don’t get the idea that it will be a full and immediate return to pro-coronavirus gambling conditions.
A Modified New Normal
Specifically, Penn National Gaming’s gambling properties in Mississippi will most likely offer limited amenities and there could be capacity restrictions in the buildings.
State and local regulators will probably impose certain guidelines for a while. In anticipation of this, Penn National Gaming is preparing to impose rules and protocols pertaining to safety and social distancing on its Mississippi properties.
Nonetheless, even a modified return to normalcy will be a welcome breath of fresh air for folks itching to be entertained. The urge to enjoy the real-life gambling experience hasn’t really gone away. It’s just in hibernation, but the gambling crowds will return and Penn National Gaming will be glad to have them back.
As we would expect, Penn National Gaming President and CEO Jay Snowden is eager to facilitate the return to pre-pandemic conditions:
Penn National is very well-positioned to resume its positive momentum that was cut short in mid-March by the COVID-19 pandemic. Our geographic diversification across 19 states – with no more than 15% of our revenues being derived from any single state – should be a significant benefit as states begin to open casinos on a sequential basis.
While the prospect of reopenings in Louisiana and Mississippi is exciting, Penn National Gaming could really hit the jackpot in Nevada. As InvestorPlace contributor Ian Cooper wrote, the Nevada Gaming Commission recently approved its guidelines to reopen Las Vegas soon.
Again, it won’t be a complete return to normalcy. The casinos will have a 50%-occupancy limit and there will be limitations on the seating at table games.
Nevertheless, it’s all moving in the right direction. Gradual progress is still progress. PENN stockholders should appreciate the baby steps towards a quasi-return to a robust gambling market.
The Final Word on PENN Stock
It could be said that the success of PENN stock depends on individual states easing their restrictions. Fortunately, this is already under way. Prepare, then, for the restless crowds to return to their socializing and gambling ways soon enough.
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.