Three casino stocks to buy in pursuit of a royal flush currently are trading at discounted prices that are unlikely to last long as the venues begin opening again to serve their patrons who come prepared to spend money and are willing to gamble some of it away as part of the experience.
These three casino stocks to buy could become part of an investing royal flush similar to the way a poker player could draw an unbeatable combination of cards consisting of an ace, king, queen, jack and ten of the same suit. That kind of a winning hand in poker is extremely rare, as is the current pricing of casino stocks that fell during the recent COVID-19 shutdowns about as low as they ever go.
COVID-19 has had an impact on virtually every sector of the stock market, but certain companies, such as the retail grocers, found success in online platforms and re-envisioned customer care by offering curbside pickup and at-home delivery. The airline industry received federal government aid to keep operating, even with drastically reduced flights and deep cost-cutting.
Three Casino Stocks to Buy Missed out on Government Bailouts
However, the casino and gaming industry was left unaided by any government bailouts, even though casino stocks were among the hardest hit in the early phases of the pandemic. But Las Vegas began reopening in early June and certain casino stocks quickly bounced off their latest lows.
By June 2, Caesars (NASDAQ: CZR) and MGM Resorts (NYSE: MGM) zoomed more than 140% off their troughs on March 18. While Las Vegas Sands Corp. (NYSE: LVS) may see a slower U.S. recovery, analysts predict that its Macau location in Asia will recover quickly. In 2019, the Macau casino of Las Vegas Sands brought in more than 50% of the company’s revenue.
Chart courtesy of www.StockCharts.com
Caesars Is One of Three Casino Stocks to Buy
Jim Woods, who heads Successful Investing and Intelligence Report, and Mark Skousen, leader of Forecasts and Strategies and Home Run Trader, team up to combine their respective strengths to choose recommendations for their premium Fast Money Alert advisory service. In the June 8 edition of Fast Money Alert, they wrote that their current favorite stock in the casino industry was Caesars, which is back above its 200-day moving average, offering a positive indicator for the stock.
Caesars has a market capitalization of $8.3 billion and has been making a steady recovery after its shares fell 11% year to date, according to an article on CNBC. The company has reopened 22 of its properties nationwide, not including its Nevada property, boosting revenue in the quarter that ended March 31 by 2%. Caesars’ shares showed resilience by rising more than 2% last Tuesday, June 16.
MGM Is Another Casino Stock to Buy, Especially for Patient Investors
MGM Resorts International is one of the largest gambling businesses in the world and its portfolio consists of 30 properties. In early May, the company completed an offering of $750 million worth of debt. In a press release, MGM’s CFO Corey Sanders said the extra income would help keep the company solid during COVID-19.
“The proceeds from this offering have further enhanced our already strong liquidity position to provide us with additional resources as we continue to navigate the impact of the COVID-19 pandemic on our business,” Sanders said.
Though the company is still 30% below where it traded pre-COVID-19, its stock has almost quadrupled in value since its March low. With the extra liquidity from the debt offering, it may have the financial stability to ride out the rest of the pandemic and make a strong recovery.
To solidify MGM as a potential money-maker, the company received a positive adjustment to its relative strength rating. According to Investor’s Business Daily, MGM’s rating jumped from 77 to 87.
Chart courtesy of www.StockCharts.com
A Third Casino Stock to Buy Is Rebounding Las Vegas Sands Corporation
Investment expert Hilary Kramer, author of the e-letter, Trading Desk, and several investment services such as GameChangers and Value Authority, reported on June 5 that Las Vegas Sands looked promising after an earlier drop.
“COVID-19 might translate to only a 25% revenue gap for the company this year,” Kramer said. “The stock is down 30% from its pre-outbreak peak. That looks like a buying opportunity to me.”
Her prediction is that within the next six months, the company will be able to regain the majority of the revenue it lost due to COVID-19.
Chart courtesy of www.StockCharts.com
Founding Partner of BKForex Places His Money on Las Vegas Sands’ Macau Location
In an interview with CNBC, Boris Schlossberg, managing director of FX Strategy for BK Asset Management and co-founder of BKForex.com, said that the markets are betting on a swift rebound in Macau, which is located on China’s southern coast and is the world’s largest gambling destination.
“The return to Macau is going to be much more rapid than the return to Vegas and much more manageable, more supportive from a casino point of view,” Schlossberg said.
He then added that LVS’s Macau location will generate more revenue than its Las Vegas location.
“Therefore, if you’re going to make the bet, make the bet to LVS,” he said. “Because that’s going to be the profit maker for them, not Vegas but Macau,”
In 2019, the Macau location reaped $8.83 billion in revenues, which was 63% of the company’s total sales. He added that LVS will see the largest rebound of any casino company because it’s the biggest operator in Macau and the majority of revenue there is generated from gaming rather than entertainment.
Investors in Casino Stocks are Gambling on a Recovery
Ari Wald, the head of technical analysis at Oppenheimer, said that casino stocks have not yet seen the end of their recovery.
“Typically, at market turning points you’re going to see investors embrace the most beaten-up laggards.” Wald said on June 2 during CNBC’s “Trading Nation.”
Ultimately, casino stocks took a large hit but may have the balance sheets to back a recovery. For patient and possibly daring investors, the latest drop in stock share prices may be the time to buy. Las Vegas’ reopening was a sign that this industry has the potential for a strong recovery, but like every other industry, there will be setbacks.
However, what makes this industry impressive is the lack of aid it received, compared to airlines and others. Without any extra help from the federal government, some of the largest casino companies have been able to whether the COVID-19 storm. And with their most recent surge in the market, this may be the time to jump back into purchasing casino stocks.
Emily Mirabelli is an editorial staffer at Eagle Financial Publications and she also writes for www.StockInvestor.com.
