To get you in the mood for playing the ponies this weekend, here are five Kentucky Derby stocks that could surprise you with a winning streak: Churchill Downs (CHDN), Wynn Resorts (WYNN), Fortune Brands (FO), 1-800-Flowers.com (FLWS) and Yum! Brands (YUM).
This Saturday, May 1, marks the 136th annual Kentucky Oaks and Derby in Louisville, Kentucky. The early favorite, Lookin At Lucky, suffered a blow late this week when the horse drew a poor post position. He’s still a 3-1 favorite in the field of 20 horses that will run a 6:30 p.m. Saturday.
To pass the time over the weekend while you sip your mint julep, you may want to consider looking into one of these five Derby stocks to buy:
Churchill Downs (CHDN): In case you didn’t know, the very track where the “fastest two minutes in sports” are run is actually part of a publicly traded company. Churchill Downs is probably a longshot for your portfolio -- the company has only posted one profitable earnings report in the last four quarters, and is projecting another run in the red on May 5 – but shareholders of online gambling site Youbet.com (UBET) signed on in early April to buy the operations for $136 million. A turnaround could be in the works, but the odds are still long on CHDN.
Wynn Resorts (WYNN): Speaking of gambling, what’s a trip to the track without a little wager? Wynn Resorts is one of the best gaming stocks in the business, posting a stunning 58% return year-to-date thanks to it's Asian casino operations. Specifically, just yesterday Wynn earnings showed that the company swung to a first-quarter profit on strong revenue growth in Macau. WYNN stock earnings also showed a smaller increase in its Las Vegas operations.
Fortune Brands (FO): Fortune makes bourbons Jim Beam, Maker’s Mark, Old Grand-Dad and Knob Creek. That’s a wide variety of the Kentucy spirit to put in your mint juleps on race day. FO stock is up about 30% year-to-date on strong growth as consumer spending firms up, including a great earnings report on Thursday. Analysts were expecting Fortune Brands earnings to come in at 38 cents a share and the company posted EPS of 49 cents -- a 29% surprise. This stock is up +25% YTD, over three times the gains of the broader market, and seems a solid contender for your portfolio.
1-800-Flowers.com (FLWS): The Derby is frequently referred to as "The Run for the Roses," because a blanket of 554 red roses is awarded to the winner each year. Planting 1-800-Flowers.com before the derby could result in profits blooming for your portfolio. But there’s no denying FLWS is an underdog. The company posted a quarterly loss in its latest report. But the good news is that the loss narrowed dramatically from $64.3 million last year to just $5.9 million in its latest earnings report.
Yum! Brands (YUM): An official sponsor of the Kentucky Derby, Yum! is the parent of Colonel Sander’s KFC. Almost every investor surely knows that the company was once referred to as Kentucky Fried Chicken before YUM execs decided to go with the acronym. YUM stock has really exploded in 2010 after the recession took its toll on shares last year, and aggressive growth plans for brands like KFC and Taco Bell bode well for this stock. YUM could be the favorite in this field, though its worth noting that it is running in the footsteps of restaurant powerhouse McDonald’s (MCD).
April 30, 2010
By Jeff Reeves, Editor, InvestorPlace
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