Election Watch: 2 Stocks to Buy in November
It seems fair to say at this point that the upcoming election is a bit divisive. When looking at stocks, it's helpful to put political persuasions aside and seek out companies that won't get drawn up in the volatility and debate.
It's not going away. Neither party has done much of anything to impede the spread of states legalizing sports betting. DraftKings (NASDAQ: DKNG) and Penn National Gaming (NASDAQ: PENN) offer compelling access to an industry that is in the very early stages of realizing its full revenue potential. With professional golf's Masters Tournament set to be held in November, an NFL season that seems likely to carry all the way through, and the pending return of more college football teams in October, there are some big betting opportunities that will roll through the fall and into winter. It's a market that can avoid the political turmoil of the election. Overall, I prefer DraftKings for the advantage it has in terms of an already established user base. Penn National, with its investment in Barstool Sports, is working to build out the launch of its sportsbook.
The cautionary tale at this moment is valuation. DraftKings had an epic run of nearly 500% this year, with no earnings to speak of. The fantasy sports/betting firm is down $230 million in the first six months of this year. With the announcement that the company was issuing another 32 million shares, the stock is down from its all-time highs. I exited my DraftKings stake this week on the news, and think the correction will continue, with the potential for a new opportunity in November. The basis for the pullback to continue is the disconnect between revenue and pricing, along with the increasing prevalence of COVID-19 cases, and cancellation of games within the NFL. The season won't be cancelled, but it's enough of a headache to give the market a pause.
Source Fool.com
