With March Madness just days away, keep an eye on gambling stocks.
That includes DraftKings (DKNG), which just caught double bottom support around $18 – and could see higher highs. Last year, according to the American Gaming Association, more than 45 million people planned to wager $3.1 billion on the games.
About 20.9 million American adults were expected to bet on the tournament outside of bracket contests—at a retail sportsbook, online, with a bookie or casually with friends. And, 36.5 million Americans will wager via a bracket contest or similar pool.
While gambling predictions from the AGA aren’t out just yet, we expect to see similar numbers. Better, gambling stocks, like DKNG did push higher – temporarily – with 2022 March Madness. In fact, DKNG ran from about $15.50 to just above $21 at the start of the tournament. The stock also ran briefly in 2021 and in 2020, as well.
Even better for DraftKings, DKNG could be profitable sooner than expected, according to Casino.org. That’s the take of Morgan Stanley analyst Stephen Grambling, who rates the stock with an outperform rating, with a $20 price target. “We expect an inflection in profitability in 2023 to surface value from the company’s NOL (net operating loss) and decouple the stock from the broader ‘unprofitable tech’ basket,” he added.
Another way to trade March Madness is with an ETF.
Look at the Roundhill Sports Betting & iGaming ETF (BETZ), for example. With an expense ratio of 0.75%, the $16 ETF offers diversification with Entain PLC, Flutter Entertainment, Penn Entertainment, DraftKings, Churchill Downs, MGM Resorts, and many more. What’s nice about an ETF is that it offers greater exposure at less cost.
Or, you can invest in one of the many sponsors of March Madness, including Coca-Cola (KO).
With strong demand, dependable dividends, and incredible earnings growth, Coca-Cola may be of the best stocks to consider, long-term. Buffett, who drinks about five cans of Coke a day, agrees, once calling KO a “forever” stock. Coca-Cola is also a dividend king, raising its dividend for the last 60+ years. It currently has a yield of 3.13%.
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