Forget Las Vegas: Your Money Has Better Odds With These Companies

By Markets Fool.com

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Don't let the recent string of casino bankruptcies fool you. When it comes to the long-term outcome of casino gambling, the house always wins.

Macau may be suffering from the effects of China's recent regulatory crackdown, and both Trump Entertainment Resorts and the largest unit of Caesars have declared Chapter 11 bankruptcies within the last year. But that doesn't mean players at casinos can logically expect a return on their bets.

Even the games that are fairest to the player offer the house a small edge that adds up to a significant advantage over time. That's the prevailing truth that casino operators aim to obscure with amenities like free drinks and design choices such as the absence of windows and clocks.

That's not to say that gambling can't be fun or even generate big windfalls for players, but if your goal is enrichment rather than entertainment, better options abound. To that end, we asked three Motley Fool contributors to spotlight stocks that will serve investors better than chasing Lady Luck in Las Vegas. Read on to learn why PepsiCo , Best Buy , and Blackberry made the list.

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Bob Ciura (Pepsi): I'm an investor, not a gambler. It frustrates me greatly when I hear someone say that investing in the stock market is akin to betting at a casino. It just isn't true. At a casino, gamblers are playing a zero-sum game. What one player wins, the house loses, and vice-versa. By contrast, when investing, you're taking an ownership stake in a company, and are entitled to the residual profits of the company.

In that light, there's perhaps no better consumer stock to invest in than PepsiCo. Buying shares of PepsiCo gives investors a small piece of a world-class company with strong brands. PepsiCo's massive product portfolio includes 22 brands that each collect at least $1 billion in annual sales, including its flagship Pepsi, as well as Mountain Dew, Diet Pepsi, Doritos, and Ruffles.

Companywide, PepsiCo generates a lot of cash flow. In fact, PepsiCo raked in $7.6 billion of free cash flow in 2014, up 11% from $6.8 billion the previous year. The bulk of this cash flow is steadily returned to investors. Over the past decade, PepsiCo has returned more than $60 billion to shareholders in combined dividends and share repurchases. In 2015 alone, PepsiCo expects to return $8.5 billion-$9 billion to investors. After its last earnings report, PepsiCo raised its dividend by 7%, which is its 43rd consecutive year of increasing its dividend.

Don't gamble: invest. And for a great stock to invest in over the long-term, go with PepsiCo.

(Best Buy): Investing in Best Buy -- a brick-and-mortar consumer electronics chain -- may seem like gambling in the age of Amazon.com and online retail. However, the company's turnaround efforts offer investors an opportunity with far better odds than those of a casino.

Image source: Best Buy

Best Buy has taken a multitude of steps over the past few years to increase its competitiveness. The company sold off its European and Chinese businesses, allowing the retailer to focus more heavily on the United States, its strongest market by far. Best Buy has removed layers of management and slashed its operating costs, transforming it into a much leaner company.

Best Buy has also invested heavily in e-commerce, revamping its website and implementing a ship-from-store program, which allows the company's stores to ship online orders directly, cutting down on shipping times. The strategy has worked so far, with online sales growing by 19.8% and 16.7% in fiscal 2014 and fiscal 2015 respectively.

All of these steps have led to profit growth. In fiscal 2015, Best Buy reported non-GAAP EPS, which excludes a one-time benefit from the sale of Best Buy Europe, of $2.60: up 25% compared to fiscal 2014. And in the first quarter of this year, Best Buy reported modest non-GAAP earnings growthdespite analysts expecting a substantial decline.

Best Buy trades at just 13 times non-GAAP earnings. And with plenty of room to expand its profit margin as inefficiencies are wrung out of the business, Best Buy offers a long-term opportunity for investors. And as those investors wait for Best Buy's story to play out, they will be rewarded for their patience by a solid dividend yield of 2.7% and a restart of the company's share repurchase program.

(BlackBerry): BlackBerry stock trades down more than 90% from its lifetime high and could still be classified as a risky investment. The company's lumbering turnaround effort has yet to generate meaningful top- and bottom-line results, and it's still a huge underdog in the handset space.

On the other hand, BlackBerry has a promising Internet of Things platform, a solid balance sheet with $2.8 billion in cash and a market cap of approximately $5.4 billion, and it is also a potential acquisition target. Bob and Tim wisely recommend investing over gambling, and I still regard Blackberry as more of an investment than a gamble -- but it's an investment with a heavy element of risk, offset by potentially explosive upside.

Much of the company's hopes for the future are pinned on its IoT security platform, and I think there's real potential here. The company's strength in security allowed its phones to maintain presence and brand strength in the enterprise market, and there will be a big need for secure interface software if the Internet of Things takes off as anticipated.

Meanwhile, the surprisingly warm reception of the company's Passport phone is evidence of some momentum on the hardware side. Finally, rebounding margins and room for growth in enterprise software provide avenues to stock success even if acquisition rumors involving the likes of Microsoft, Samsung, and Apple prove to be no more reliable than scuttlebutt from the average racetrack bookie.

The article Forget Las Vegas: Your Money Has Better Odds With These Companies originally appeared on Fool.com.

Bob Ciura owns shares of Apple and PepsiCo. Keith Noonan has no position in any stocks mentioned. Timothy Green owns shares of Best Buy. The Motley Fool recommends Amazon.com, Apple, and PepsiCo. The Motley Fool owns shares of Amazon.com, Apple, and PepsiCo. The Motley Fool is short Caesars Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.