Las Vegas casinos are now open. Though gamblers in Sin City are encouraged to wear masks while partying the night away, few do. This is concerning considering the fact that it appears as a second wave of the coronavirus might soon sweep across the nation. However, casinos will remain open simply because the economy cannot survive a second shutdown.
It is quite clear gamblers and revelers are willing to risk coronavirus contraction to gamble the night away, party and live life to the fullest. Las Vegas Sands Corp (LVS), Wynn Resorts (WYNN), MGM Resorts International (MGM), Melco Resorts (MLCO) and Eldorado Resorts (ERI) are worth keeping an eye on as gambling resumes.
Las Vegas Sands Corp (LVS)
You have the opportunity to be a partial owner of the Venetian, Palazzo, Sands Expo convention center and other gambling-related properties. Scoop up LVS shares, ride out the coronavirus and you should emerge a winner after a few years or possibly even a few months.
The POWR Ratings have LVS ranked fourth of 20 stocks in the Entertainment – Casinos/Gambling category with solid grades across the board along with a five-year price return of 18.82%. The analysts’ average price target for the stock is $56.84 with 11 recommending investors buy, three recommending investors hold and none recommending investors sell.
Even if the United States is hit hard with a second wave of covid-19, LVS will still have an opportunity to generate revenue from its operations in Singapore and Macao.
Wynn Resorts (WYNN)
The potential for a second wave of the coronavirus should steer investors toward casino owners and operators that conduct business in numerous markets. This way, if one country were to be hit particularly hard with a second wave, there would still be an opportunity to generate revenue from another market. WYNN has hedged its bets (pun intended), with operations in both Las Vegas and Macao.
The POWR Ratings have WYNN ranked fifth of 20 stocks, highlighted by a B Peer Grade. WYNN shares are up about 20% since its last earnings report. However, the average price target for the stock is $96, meaning there is minimal upside. The analysts’ high forecast for the stock is $122.
MGM Resorts International (MGM)
If you have been to Vegas, you likely stepped foot in a casino owned by MGM. MGM runs several Sin City casinos including the Mirage, the Bellagio and the MGM Grand.
As one of the largest gambling businesses in the world, MGM’s portfolio consists of 30 hotels. However, nearly half of MGM revenues stem from the Las Vegas strip.
The POWR Ratings are quite friendly to MGM: an Industry Rank of 6 out of 20 stocks in the Entertainment – Casinos/Gambling category with a solid Trade Grade and Peer Grade.
Melco Resorts (MLCO)
Investors on the prowl for a casino owner, operator and developer outside of Las Vegas should consider MLCO. Based in Hong Kong, MLCO operates the majority of its properties in Asia.
MLCO’s POWR Ratings are quite favorable: an Industry Rank of 7 out of 20 stocks in the Entertainment – Casinos/Gambling category along with a B Peer Grade. The average analyst price target for the stock is $22.86. The stock’s 52-week high is $25.49.
MLCO is one of the more appealing casino stocks as it is positioned in Asia where the coronavirus has been handled with comparable grace. Furthermore, MLCO has more than a billion dollars of cash on its balance sheet.
Eldorado Resorts (ERI)
If you are looking to invest in a company that provides casino games, entertainment, events and hotel accommodations, look no further than ERI. ERI conducts business in Nevada and Louisiana. In fact, the company’s services extend to facilities for special events, meetings, banquets, catering, skiing, golf and more.
The POWR Ratings have ERI ranked in the top half of stocks in the Entertainment – Casinos/Gambling category with a solid Trade Grade and Peer Grade. ERI has solid historical price returns of 104.94% across a three-year period and 434.79% across a five-year period.
ERI is raising additional funds through a public offering of 18 million shares of common stock along with a half-decade mortgage agreement through VICI Properties. The analysts have a high target of $57 for the stock.
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MGM shares were trading at $19.52 per share on Tuesday afternoon, up $0.07 (+0.36%). Year-to-date, MGM has declined -40.89%, versus a -2.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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