How to Buy Penn National Gaming (PENN) Stock

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Contributor, Benzinga
May 20, 2021

Few social phenomena work into everyday culture as much as gambling. Penn National Gaming (NASDAQ: PENN) was a market leader in horse racing before expanding into other gambling ventures. As people start returning to the stadiums, they could provide investment opportunities for you.

Thinking about investing in PENN and not sure where to start? This guide will show you how to buy stocks, including PENN.

How to Buy PENN Stock

  1. Pick a broker.

    You can easily buy stocks through your computer or through a phone app. Assessing your needs is important as you decide which broker to land on. 

    Take a look at a list of considerations before you choose a broker:

     What platform do you intend to use? Consider a mobile-friendly broker instead of a desktop or web-based one.
     Do you need to do extra research? Do you like to do thorough research? Check to see whether your broker provides extra research opportunities.
     How much do you want to pay in commissions? Picking a low-cost brokerage is an important step in your investment plan. Every dollar you save in commissions gives you extra money to invest.
     Do you require a professional advisor? Discount brokers are cheaper but offer less guidance. If you need professional advice, you might want to go with a full-service broker.

  2. Decide how many shares you want.

    The number of shares you want to buy will depend on the amount of capital you want to invest and the current price of PENN. The stock currently trades at $100, which means that investing $1,000 will get you roughly 10 shares. The amount of capital you choose to invest depends on your personal investment plan and risk tolerance. Note that Penn is a growth stock and growth stocks are riskier but grow at a faster rate than the market average.

  3. Choose your order type.

    Familiarize yourself with basic terminology before you invest:

     Bid: The maximum price the buyer is willing to pay.
     Ask: The minimal price at which the seller is willing to sell.
     Spread: The difference between the bid and the ask. For example, if the bid for PENN is $110.35 and the ask is $110.79, then the spread is $0.44.
     Market order: Your broker will buy the next available PENN shares, regardless of their price. You will specify the number of shares and your broker will fill that order as soon as possible. You might pay more but your order will be filled faster.
     Stop order: An order to broker to buy or sell a stock at a certain price. When triggered, a stop order will become a market order.
     Limit order: An order to buy or sell a stock at a specific price or better. For example, if you want to buy shares of PENN for no more than $110, your limit order for this amount will only execute if PENN stock is at $110 or lower.

  4. Execute your trade.

    Once you are familiar with your selected broker and have decided how many PENN stocks you want to buy, decide your entry point and set an order. Using a limit order means you might have to wait a bit until it gets filled. Remember to check your broker statements periodically.

Best Online Brokers

The easiest way to buy PENN stock immediately is through a brokerage. If you don’t have a brokerage account with access to the NASDAQ exchange, you can pick one from our list of favorite online brokers.

PENN Stock History

Based in Wyomissing, Pennsylvania, Penn National Gaming started as a horse track operator in the late 1960s and gradually expanded over the decades. A public company since 1994, PENN currently has a market cap of $17.9 billion. The company operates 43 properties in 19 states and employs 18,000 employees.

Q4 2020 reported a net income of $11.1 million. This brings the company back to profitability after the 2020 downturn. Shares of Penn National Gaming trade on NASDAQ under the ticker symbol PENN. 

The stock currently trades above the 3 key support levels and both 50-day and 200-day moving averages. After a rally in late January, the pullback might provide new buying opportunities. 

Screenshot from Benzinga Pro on 2/11/2021

Pros to Buying PENN

From regulatory change to Barstool’s buyout, check out a few reasons why you might want to buy PENN:

  • Lucrative sector: As the worst of the pandemic slows, the gambling market is now poised for a rebound. Furthermore, as sports betting undergoes a significant positive regulatory change in the U.S., it could boost the earnings of well-positioned gambling companies. 
  • Barstool buyout: PENN acquired 36% of Barstool Sports in January 2020 with an option for a full buyout in 3 years. Started in 2003 by David Portnoy, Barstool Sports emerged as one of the most popular blogs in the sports and pop culture niche. It ranks among the top 5,000 visited websites in the world. Barstool Sports also commands a significant presence on the mobile sports betting market after launching the Barstool Sportsbook app in September 2020.
  • High institutional ownership: Institutions hold over 90% of PENN. Fidelity Investments, BlackRock and the Vanguard Group hold over 30% of the company. High institutional ownership indicates a stable shareholder base.

Cons to Buying PENN

On the flip side, check out the reasons you might want to exercise caution:

  • Already rallied this year: PENN already rallied over 30% in 2021 so far. In a situation where you want to buy a stock after a significant rally, you generally have 2 approaches: 1. Build a position and adjust to the market environment as it unfolds or 2. Wait for a significant pullback and then buy at a designated target.
  • Strong competition: Despite the high growth potential of sports betting in the U.S., this is a competitive market and includes other players in the field, such as DraftKings, Flutter Entertainment (Paddy Power) and BetMGM. PENN has a chance but becoming a clear market leader is not an easy task.
  • High volatility: Beta is a measure of a stock’s volatility relative to the market. Stocks with a beta above 2 are high-beta stocks as they move more than the rest of the market in either direction. PENN currently has a beta of 2.75, so consider that when you include it in your portfolio.

Look Toward Growth in 2021

PENN stock could represent a good combination of the traditional and modern business model if you’re looking to dip your toe into the gambling market.

As the U.S. betting market grows, you’ll still see a lot of room for expansion. The post-pandemic recovery will bring back the diversified casino business that operates in 20 jurisdictions and produced $5.3 billion in revenues in 2019.

About Stjepan Kalinic

Forex, Equity Analysis, and Financial Education