Hold Landcadia Holdings II Stock Through This Time of Transition

Owners of Landcadia Holdings II (NASDAQ:LCA) shares should have had Dec. 18 marked on their calendars for a while now. That’s the day when LCA stock shareholders were scheduled to vote on Landcadia’s merger with Golden Nugget Online Gaming. Last Friday, however, it was announced that the vote would be delayed until Dec. 29.

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Based in Houston, Texas, Landcadia Holdings II is a special purpose acquisition company (SPAC) led by a billionaire named Tilman Fertitta. As a shell company, Landcadia’s only real purpose is to take Golden Nugget Online Gaming public.

Back in June, Landcadia announced its intention to acquire Golden Nugget. The original expectation was that the merger deal would close during 2020’s third quarter.

So, LCA stockholders have been kept waiting, until now. The shareholders are expected to vote in favor of the merger. With that hurdle soon to be in the rearview mirror, informed investors should assess the value proposition of Golden Nugget Online Gaming.

LCA Stock at a Glance

If you need proof that the market is generally bullish on the gaming industry in 2020, just take a look at the price action of LCA stock.

Prior to June of this year, LCA stock was going nowhere fast. The bulls, which were few and far between, struggled to break through the $10 level.

As you might expect, the announcement of the merger with Golden Nugget catalyzed the LCA stock price. However, it wasn’t always a smooth ride for the bulls. It was a rollercoaster ride as the stock shot up to $16, then back down to $11 and change. After that, LCA popped up to $18 and then fell back to the same level, slightly above $11.

If anyone got shaken out of the trade, they’re probably regretting it now. That’s because November and December proved to be terrific months for LCA stock, with the share price rocketing up past $20.

So, what’s the lesson learned here? Don’t bet against the American gambling industry? Perhaps the more important lesson is to expect volatility and stick to your guns if you truly believe in a company’s future.

Why Bet on the Gambling Market Now?

Win or lose, gambling can be an enjoyable experience if done responsibly. And during these stressful times, betting can serve as a release of tension after being cooped up in the house.

Not everyone will agree with those sentiments, but many Americans do. That’s the conclusion evidently supported by Chris Cylke, senior vice president for governmental affairs for the American Gaming Association.

“We’ve been doing a lot of research on consumer sentiment, and with the public in general, nearly 9 in 10 adults view casinos as an acceptable form of entertainment,” said Cylke.

Also noting that 70% of the public views the gaming industry as well-run, Cylke adds that “lawmakers are becoming more comfortable with iGaming,” citing the obvious financial motive. “Legislators are going to be looking under every couch cushion to find additional sources of revenue.”

Expanding State by State

As you can see, the public is largely willing to accept gambling as a legal form of entertainment.

And 2020 has been a banner year for this market, with voters choosing to decriminalize some forms of sports betting this November in three states: Maryland, Louisiana and South Dakota.

Maryland voters were particularly enthusiastic, having voted with a two-to-one margin in favor of the gambling expansion. Notably, Maryland’s voters approves both brick-and-mortar and mobile sports betting.

These states could be fertile ground for Golden Nugget Online Gaming to generate revenues in the near future. For the time being, however, the company is a major force in a gambling mecca: New Jersey.

In that state, Golden Nugget generated a whopping $26 million in the iGaming segment. That figure represents an impressive 37.5% year-over-year increase.

Moreover, Golden Nugget inked a deal recently with the Greenbrier Resort to provide online gaming in West Virginia. On top of that, Golden Nugget is expanding its operations into Michigan. Clearly, this is a company that’s scaling up fast and furiously.

The Takeaway

LCA stockholders should focus on the incredible growth opportunity presented by Golden Nugget Online Gaming.

As the long-awaited merger vote is finally upon us, it’s time to look ahead and take a bullish position in the highly lucrative U.S. gambling market through Landcadia Holdings.

The stock currently has an “A” rating and a strong buy recommendation in my Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.