
The new year is about to begin.
No, not the New Year that turned on Jan. 1. This is the new year for investors as Donald Trump will again take over as president (or autocrat, as his critics fear). Sell-side analysts have completed their year-end reviews and updated their earnings estimates and stock price targets for companies they cover, and those companies are about to report fourth-quarter financial results and, in many cases, provide their first guidance for 2025.
In the gaming industry, there is something of a consensus among those analysts: companies with steady growth plans like Boyd Gaming and Churchill Downs will continue to grow steadily, brick-and-mortar casinos will be stable (or stagnant if you’re of a more bearish nature) and digital gaming will continue to grow double-digits, both in online sports betting and in iCasino.
There is also an unspoken consensus, perhaps unspoken because it is now a core belief that needs no mention, that brick-and-mortar gaming stocks will continue to be valued well below those of similar industries in lodging and entertainment.
If there is cause for deviation from this boringly familiar outlook, it is the possibility that mergers and acquisitions, which picked up for gaming technology companies last year, will now extend to casino operators and lift stock prices. That, in turn, would also benefit REITs, which could be expected to be involved in many, perhaps even most, of such property transactions.
Otherwise, we have been in something of a wait-and-see interregnum between Joe Biden and Donald Trump 2.0.
We’ve mentioned before that Trump is perhaps the biggest unknown in 2025, at least for near-term stock price movement.
One reason given for the run-up in stocks in recent months is optimism that businessman Trump will implement business-friendly policies.
However, that optimism is met by an army of skeptics who fear Trump may implement inflationary policies, such as tariffs that raise the costs of products for both businesses and consumers, or immigration rules so strict that they reduce a needed growth in the labor force. Then there are his promises of tax cuts that could goose the economy but also feed the federal deficit, thus planting the seeds of the next round of interest rate increases and perhaps the next recession.
Then there are all the possible ramifications of an America First foreign policy, from strengthening the U.S. position globally to jarring business confidence, thus the stock market.
Perhaps most likely is that the next four years will bring no more surprise crises or undermining economic policies than seen in any presidential administration, or in Trump’s first term, for that matter.
In other words, there may be disruptions that cause consumer discretionary stocks like those of gaming companies to take a dive, but the long-term impact should be negligible as long as America retains capitalism and its form of republicanism with a small R.
As Warren Buffet has said, throughout wars and economic cycles and all of the ups and downs of life, America has been a bull market for 400 years and is likely to remain so.