PENN, Red Rock, and Hilton are among J.P. Morgan’s top gaming and leisure stock picks

J.P. Morgan started sweeping coverage of the gaming and lodging sector on Monday, with 19 new ratings initiations.

The firm set out PENN Entertainment (NASDAQ:PENN), Red Rock Resorts (NASDAQ:RRR), and Caesars Entertainment (NASDAQ:CZR) as its top gaming picks, while the top lodging picks were Hilton Worldwide (NYSE:HLT) and Ryman Hospitality Properties (NYSE:RHP). All five of those stocks earned Overweight rating.

The gaming sector was noted to be rife with risks, although potential rewards are seen as high. Meanwhile, in the current lodging environment, the only certainty was said to be uncertainty.

“To state the obvious, the current economic environment is marked by elevated uncertainty, with the combination of tariffs, interest rate policy, and fallout from geopolitical tensions casting clouds over a rather resilient US consumer. Similarly, we take a tactical stock-picking approach in Gaming where we see attractive risk/rewards, while in lodging, we are willing to pay a premium for stocks with durable growth trajectories and superior earnings visibility.”

Other stocks that J.P. Morgan started off with an Overweight rating included Churchill Downs (CHDN), Caesars Entertainment (NASDAQ:CZR), DraftKings (DKNG), Sportradar (SRAD), and Wynn Resorts (WYNN). Meanwhile, Choice Hotels International (CHH), Park Hotels & Resorts (PK), and Sunstone Hotel Investors (SHO) were initiated with Sell ratings.

The stocks in the gaming and leisure sector with the highest Seeking Alpha Quant ratings are Sportradar (SRAD), Super Group Limited (SGHC), and PENN Entertainment (NASDAQ:PENN).