Penn National: It’s not gambling if it’s a sure thing
Today's Financial News - Posted October 21, 2009
Penn National (NASDAQ:PENN) released its latest quarterly report. Shareholders are being rewarded today even though the figures were worse than expected. But this one’s not about the past. It’s about the future.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): There is not much good news out of the Las Vegas gambling industry these days, but that does not mean it is impossible to find.
You simply need to know where to look.
With “staycations” all the rage and corporate event planners diligently avoiding any destination that sounds remotely luxurious, Sin City is desperate for business. But even during a nasty recession, Americans still drink, smoke and gamble what’s left of their money.
They just do it closer to home.
That is good news for regional gaming operators like Penn National (NASDAQ:PENN) and its 26,000 slot machines and 374 gaming tables spread across more than a dozen states.
It seems like Penn is everywhere gambling is popular these days. Everywhere but Las Vegas. And today, shareholders are getting rewarded for the strategic move.
Avoiding calamity
By avoiding the high-competition, high-cost world of Vegas, Penn maintains healthy margins, a decent balance sheet (especially when compared to competitors) and it has a dominant competitive market stance as financially desperate states open their borders to gambling.
After releasing its latest quarterly earnings this morning, shares of Penn are up by over 7%. Even though the figures released were not as strong as expected, it is obvious Wall Street was pricing Penn as if it was a Vegas operator.
Shares are surging because things could be much, much worse.
But savvy investors are not looking back at past results. Of course a nasty recession is going to depress revenues and earnings. But what about the future?
That is where things really shine for the growing company.
As most of its competitors dove for cover during the past year or so, Penn diligently worked on its expansion plans. The headlines surrounding the company are filled with revenue-growing stories.
Ohio, West Virginia, Maryland, Kansas and Pennsylvania all offer tremendous growth opportunities. Penn has been able to sneak its way into the states by bribing legislators with strong tax revenues and by offering voters high-paying jobs.
In the end, it will add up to strong top-line growth for the $2.25 billion company.
This is old news for TFN Strategic Trader subscribers. I clued them in on the situation last month when I recommended buying mid-term call contracts. So far today, those contracts are up by over 35%.
Is this our next triple-digit winner?
Give me a week and I’ll let you know. Or you could find out for yourself firsthand.
No matter what the economy does, gambling will always be a part of the American culture. We all know folks that are flat-out fanatics, if not addicts.
As states open their doors to slots and table games, it won’t be the big-names from Vegas cashing in. It will be the small, regional players like Penn.
You can bet on it.
Next Article: Turnaround for Sinobiopharma (SNBP)
2 Responses to “Penn National: It’s not gambling if it’s a sure thing”
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October 21st, 2009 at 7:54 am
I love your site. I have been involved in penny stocks for my 50 yrs in the business.
I am worried as to what happens if the economy does not improve and we get another downturn.At 81 yrs old I hope the recovery continues before my days are over. I lost 3 mil in this down turn and am almost broke ,but I am trading from home and really need help.I know there is no guarentee but with the capital I have left the penny mkt gives me some hope. keep me posted.
thanks
Bernie
October 22nd, 2009 at 5:51 pm
I went ahead and ordered pants, socks, underwear, and boots online. ,