Anthony Speciale Stock Market Analyst

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Sports Betting Isn’t A Gamble With These 3 Plays (Part 2)

Speaker 1 (00:00):

Hi everyone. I’m Tim Melvin. And welcome back to a better way for wealth. Now, yesterday, we talked about the spread of sports gambling in the United States and how popular it’s become with all states except Utah, as a revenue source. We talked a little bit about DraftKings and how you might be able to surf that for a few points. If momentum was to return to the stock, I promised you three better ways to make money on sports gambling than draft Kings. And here we are, we’re going to talk about them. The first one is a company called golden nugget gaming. That’s a G N O G. This came public earlier this year as a SPAC deal was very, had a nice popular pop. And then it’s pulled back down a stock got as high as 26. It’s back down

Speaker 2 (00:41):

To around 11. Currently

Speaker 1 (00:44):

They’re taking bets in New Jersey and Michigan two huge sports gambling markets. They’re entering Colorado and Iowa. Sure. West Virginia, Virginia, Pennsylvania, Illinois, and the biggest of them all in New York are all scheduled to come on the line sometime a little later this year or early next year. So they’re going to be in some of the best markets in the country. They’re 100% mobile. They offer sports betting and they also offer online casinos, including something I haven’t seen anybody else doing. They’re choosing live dealers in their online casino. So you log on, it’s not the computer dealing to you. It’s a person dealing. I think that’s very cool and also eliminates the possibility that the algorithms are kinked a little bit to make outcomes worse than they should be for you. So that’s cool, but it’s really the sports gambling aspect of this. That’s really going to drive the growth they’re growing revenues right now at 50% a year.

Speaker 1 (01:40):

That’s more than that 30% a year that drafting was able to achieve so much more reasonably valued, like comparing on price to sales. It’s about a seven times sales, multiple which for a company growing at 50% a year, I’m pretty comfortable with now. Here’s one of the things I love about this stock is, you know, to get a stock, to move higher, you have to have institutional buy-in. That’s the big money that can come in and push a stock a lot higher to have institutional buying. You have to have analyst coverage. And you know, one of the problems with a lot of these companies that come public as a spec, no analyst coverage, not the case here. We’ve got a few analysts following stock and got two of them from two firms. And I’ve come to respect a lot over the years, they’re very conservative, smart guys are, you know, kind of value oriented.

Speaker 1 (02:31):

They pay attention to what a business is worth and not. It’s how exciting the story is, which is similar to how I operate. And normally they don’t make ridiculous or wild claims. I have built a lot of respect with me over my 30 years because of that. Here’s the deal analysts. Two of these firms are recommending this stock and they both have price targets, 12 month price targets that are more than twice the current stock price stocks, 11 and change. They’re saying 27, 20 $8 a share is where this stock ought to be trading. So if we get a double in the next year and just ride it further from there golden nugget gaming is going to be a much better way to play the spreader sports gambling. Again, your symbols, G N O G. Now the next one up, this is a don’t buy it today, stock.

Speaker 1 (03:20):

Okay. But unless you live in a cave, you know that the Delta variant of the COVID virus has gotten into society is spreading rapidly. We have the president and some governors talking about the possibilities of another lockdown in some parts of California. I don’t think they’re ever going to come out of a lockdown. But anyway, this could happen if it does casinos real close again, that will be devastating to revenues just like it was the last time. And we could see another collapse in casino value. So this second way, you only take this trade if we get it collapsed, but this is Penn national gaming, P E P E N N. Now, why do we buy Penn national? Because it, Dave Portnoy of Barstool sports Penn owns a significant percentage of Barstool and they have an option over the next couple of years to buy more than 50%.

Speaker 1 (04:19):

Now, the star of the lockdown has been de Portnoy and his Davy day trader shtick. He has 2.6 million where I call yo boy frat, you know, 30 year old frat boy followers who sign up for everything. That’s got the Barstool brand on it. So they’re going to be rolling out across the country, Barstool online sports books. I think it’s going to be, it’s going to be a pretty solid business. It’s priced into the stock right now. But if we were to get another sell off w driven by COVID or just a general big drop in market prices that was to pull Penn national back down a substantial amount, then I think it would be a great time to buy. And of course, you know, for subscribers, I’m going to let you know, as soon as this happens, that stocks at a level where I want to be in, I’m going to come on, I’m gonna tell you, Hey, buy this. We’re going to ride Barstool sports and Penn national backup to higher they’re on 36% of Barstill. Let me just make sure I get all of my numbers, right? They have a bunch of racetrack properties around the country, 41 gaming and racing properties. So you’ve got a brick and mortar business. You’ve got a growing online sports books under different brands besides just Barstool, but Barstill is what I think could be the magic of this. If we can get it at the right price.

Speaker 2 (05:36):

Now, third pick best pick of all Barna

Speaker 1 (05:40):

Flutter entertainment. This was an Irish company. The symbol here is over the counter. It’s P D Y P Y trades about a million check shares a day. Guys, plenty of liquidity here. So you can buy this just like any other stock, even though it’s an unusual symbol and it trades deep over the counter. Now they’re taking bets in the United Kingdom. Ireland Australia in the United States are great gambling markets. They own FanDuel. That’s DraftKings. Biggest competitor started as their competitor in the online fantasy sports and has remained a competitor. As we’ve gone along and moved into sports gambling, they own Fox bets and Fox is going to take a larger stake. They’re actually in court arguing over the price that Fox is going to pay for their stake as we speak. So Fox will be involved in this five sports will drive a lot of traffic into Fox bets.

Speaker 1 (06:32):

We’ve got a market cap here, guys of $30 billion revenues of almost 5 billion. So six times sales, much better valuation that we were getting with DraftKings earnings. Yeah, they’re growing pretty good. 156% last year, they are spreading their operations around the United States and indeed around the world. You know, Paddy powers, one of their their franchises that takes bets in the UK and in Ireland, you know, they book sports from all over the all over the world. They take bets on politics all over the world, really profitable business here, they get fat. They made almost $3 billion over the last year had compared that to draft gangs where nobody’s making any money yet, because they’re still spending to build out the infrastructure to move out across the country and defend off competence,

Speaker 2 (07:20):

Flutter entertainment. They’re already dug in all of their

Speaker 1 (07:25):

Markets with the exception of the United States where, you know, they’ve FanDuel is still dealing with some of the same issues as drafting. Now, here’s what’s going to happen next year. They are going to spin out that

Speaker 2 (07:37):

I’m a fan

Speaker 1 (07:39):

To shareholders. So as owners of flutter entertainment, we’re going to get up one morning and we’re going to get some shares of a standalone FanDuel in our inbox. So now we’ve got a company that’s competing in the U S directly against Draftking. That’s going to grow at a very high rate and we still own the parent company flutter. So we have a stake in established gambling operations all over the world. We

Speaker 2 (08:02):

Can get much better

Speaker 1 (08:04):

Price in terms of valuation by paying, I believe it’s around $78 a share for flutter entertainment company. That’s generating $3 billion in profits every year and growing at 156%. I think that is a much better play than DraftKings and trying to surf the momentum for a few points in the stock right now. So there’s your three alternatives to DraftKings to make money on the growing trend of sports gambling in the United States. Anyway, I’m Tim. Melvin. This has been a better way to wealth. Thanks for watching. And we’ll talk to you tomorrow.