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What MLB's Marlins outbreak could mean for the stock market and economy

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What MLB's outbreak could mean for sports and the stock market

Major League Baseball's 60-game season is up in the air after several Miami Marlins players tested positive for Covid-19.

The outbreak is a blow to companies within the sports world that were pinning hopes on a return to normalcy. Not only will any significant delays or schedule changes affect TV networks and media and advertising companies, they could also have a knock-on effect on gaming stocks.

Delano Saporu, founder and financial advisor at New Street Advisors, breaks down how it could impact two companies — DraftKings and Penn National.

"When we talk about Penn, there's diversification in the revenue stream so you have casinos opening up in parts of the country safely, but they also want that sports betting revenue as well. And, DraftKings, a lot more hinges on how the league handles the virus because a lot of their revenue is contingent on that sports betting," Saporu told CNBC's "Trading Nation" on Wednesday.

Saporu is bullish on both companies in the longer term, but he cautions investors to prepare for volatility in the shorter term.

"Look at something like DraftKings. … We don't need to chase the stock, we can look for possible corrections and possible times to pick at the bottom, but there's no need to chase any of these stocks and just kind of take a wait-and-see mentality," he said.

Both have had impressive runs. Penn National, for example, has rallied nearly 900% off a March bottom, and DraftKings is up 235% this year.

MLB's struggles with the pandemic also call into question how the rest of the economy can contain the virus and reopen safely.

"If this is the canary in the coal mine, it is scary," Gina Sanchez, CEO of Chantico Global, said during the same "Trading Nation" segment. "If these [athletes] who are extremely vigilant and have shown that they will go to great lengths to maintain their health during a pro-season cannot get a handle on this, I don't see how the average American … will manage this. This is something that I think is a very, very negative, negative outcome."

She said it suggests the recovery might take far longer than anticipated by many on the Street. To counteract that, she's recommending a defensive strategy to clients.

"When we started to reopen the economy and then started to see a resurgence and we're failing at that reopening, the likelihood that this goes from being a short-term event to more of a prolonged long-term recession, now that changes the dynamics, and this is the thing that we were most afraid of," Sanchez said.

Both value and growth stocks have rallied this month, up 5%. Value stocks are those considered cheap relative to the rest of the market, while growth stocks have a premium paid for future earnings potential.

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