Though all eyes have been on the Kentucky Derby, bettors may be better off investing in stocks related to the fabled horse race. In fact, the possibility of an upset sounds less tempting that stocks like Churchill Downs (NASDAQ:CHDN) and Jim Beam (NYSE:BEAM) at the moment.
Churchill Downs investors saw stock rise nearly 8 percent this week, the culmination of a year-long charge for the company that has grown 37 percent since Derby time in 2012. The company is heavily invested in the gambling business, a natural companion to its ownership of the Downs and the Derby itself. Despite a slight dip in gambling revenues that are attributed to the reinstatement of payroll taxes, the company is expanding its casino investments and could continue its dramatic run.
Jim Beam, one of the most recognized whiskey makers, is another stock with close ties to the Derby. Like Churchill Downs, Beam had a good week, month and year on the markets, rising over 9 percent since May 2012 to settle at an all-time high at the close of Friday trading. Beam’s best holdings may be in assets like Maker’s Mark and (less Derby-oriented) Courvoisier. Citigroup has labeled it a “buy.” Meanwhile, Derby fans have other options to consider…
Brown-Forman (NYSE:BF.A) is the company behind Southern Comfort and Jack Daniel’s, not to mention Herradura Tequila and Finlandia vodkas. While the company’s product list has tremendous appeal, Brown-Forman stock has has a tougher go of it in the last year, after it split into two tickers on the exchange. The potential for a rebound for this stock is there, as the strength of its top brands remains undiminished.
The small bump in these three stocks over the week is typically for the period leading up to Derby Day in Louisville. Betting on the gambling industry long-term would require a look into the potential legalization of different casinos and sports betting in the relevant markets. For example, companies like Dover Downs (NYSE:DDE) have lost customers coming into Delaware from Maryland as the latter has eased restrictions. For now, the Kentucky companies seem like a better bet.