The Principle Downsides Of Casino Investing
Gaming regulators hold tremendous sway over the gambling industry. First off, US organizations such as the New Jersey Division of Gaming Enforcement and Nevadas Gaming Control Board implement much higher regulatory standards than similar bodies in other countries. One restrictive decision from a states regulator can send shockwaves throughout its gaming market. Thus, operators revenues and their stock prices are at the mercy of these bodies.
Moreover, the interactive or online casino sector is booming, projected to generate $158 billion by 2028. Most land-based operators are not active in the sphere, and it is not easy for them to snag sections of this market from established iGaming brands, which will only continue to grow. Inflation also causes venues to raise their table limits, making them less appealing to casual gamblers, which make up a significant portion of their player base.
Why Trade Casino Etfs
Investing in gambling and gaming ETFs is riskier than traditional investment, such as an S& P 500 index fund. Therefore, investors should keep in mind that gambling ETFs are narrowly focused on the industry, making this sector riskier.
The gambling and gaming industry is directly connected to the consumer discretionary so it is often difficult to show good performance during the weaker economic conditions. Consumers usually spend money on entertainment and travel when the economy is strong. Similarly, they invest less money when the economy is weak. Overall, investors may keep gaming and gambling ETFs in their portfolio if they see a foreseeable future in the economy.
Currently, the COVID-19 pandemic is almost over, with effective vaccines appearing in the first month of 2021, influencing investors to focus on gambling ETFs.
How A Casino Stock Hits The Jackpot
The wild card for casino stocks is their opportunities to expand into new jurisdictions. Las Vegas Sands, Wynn Resorts, Melco Resorts, and MGM Resorts hit a jackpot when they were granted gaming concessions in Macau, and Las Vegas Sands won big again when it won the license to build one of two casinos in Singapore. But since then, there have been few big growth opportunities.
That’ll change soon, as Japan plans to open multiple gambling licenses to the industry. It’s not clear who will win the opportunity to build there, but estimates have put the country’s gambling market at potentially $10 billion to $40 billion per year. That would dwarf the $6 billion to $7 billion in gambling revenue on the Las Vegas Strip and could come close to the $37.6 billion Macau casinos generated in revenue during 2018.
Japan is the only huge new market on the horizon today, and the company/companies that win a casino license there would see a windfall for decades to come.
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Morningstars Take On Apa
Morningstar analyst Dave Meats assigns APA no moat and puts fair value for the stock at $35. It recently traded at $33.02.
APA has oil and natural gas assets in the U.S. and overseas. The vast majority of its domestic production is derived from the Permian Basin, Meats wrote in a commentary.
This was a key growth engine for the company until 2020, when the coronavirus-related collapse in crude prices forced the company to dial back on drilling capital.
Since then, production has declined due to lower investment, though management intends to grow its Permian output to prepandemic levels during 2022.
Top Casino Stock #: Wynn Resorts
Wynn Resorts owns and operates Wynn Macau and the Wynn Palace in Macau, as well as Wynn Las Vegas and Encore in Las Vegas. The company is now facing the headwind of coronavirus in all the regions in which it operates.
In the 2021 second quarter, operating revenue soared to $990 million, from just $86 million in the same quarter last year. The company still posted a net loss of $131 million, or $1.15 per share, but this was a marked improvement from $5.97 per share in the year-ago period.
Wynn Palace opened just two years ago it has ample room to grow further. Also, Wynn Resorts completed its building of âEncore Boston Harborâ and opened its doors to this integrated resort and casino in Everett, Massachusetts in June of 2019.
Moreover, Wynn Resorts aims to expand to Japan, which legalized casino gambling three years ago. It was expected that it would take several years before the company opens a casino in the country even before the impact of COVID-19 was felt.
Another potential growth catalyst for Wynn Resorts is interactive gaming. The company has invested heavily in this area through its Wynn Interactive unit, which offers casino and sports betting on mobile devices. Its brands include BetBull, Wynn Bet and Wynn Slots.
Source: Investor Presentation
The company estimates it can generate over $700 million from interactive gaming in 2023. The company has secured market access in 15 states, with another 9 states in negotiations.
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Full House Resorts Inc
Number of Hedge Fund Holders: 21
Full House Resorts, Inc. is the Nevada-based casino operator and owner. The company also manages hospitality and entertainment facilities in the U.S. Along with Las Vegas, it also owns casinos in Mississippi, Colorado, and Indiana. Investors have been eyeing FLL due to the ramped-up construction process, expecting to grow its revenue this year. FLL ranks eleventh on our list of the best casino stocks to invest in.
In Q1 2021, Full House Resorts, Inc. generated a revenue of $42 million, up from $30.9 million in the prior-year period, showing a 36.8% increase. The casino segment accounted for $32 million of the gross revenue. Since the beginning of the year, the FLL stock has delivered a 138.7% return to the shareholders. In the past year, the FLL soared tremendously by 621%, reaching a new high of $11.26 in May. Recently, Macquarie raised its price target on FLL stock to $10.
Hedge funds are turning bullish on Full House Resorts, Inc. , as 21 funds have stakes in the company in Q1, compared with 10 in the previous quarter. With 1.3 million shares worth $11.3 million, Driehaus Capital is the biggest shareholder of the company.
Like Las Vegas Sands Corp. , MGM Resorts International , Caesars Entertainment, Inc. , Boyd Gaming Corporation , DraftKings Inc. , and Wynn Resorts, Limited , Full House Resorts, Inc. is one of the best casino stocks to invest in.
How To Trade Earnings Volatility With Iron Condors
“We rate MONARCH CASINO & RESORT INC a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.”
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- You can view the full analysis from the report here: MCRI Ratings Report
Year-to-date return: 25.6%
Churchill Downs Incorporated provides pari-mutuel horseracing, online account wagering on horseracing, and casino gaming services. It operates in five segments: Racing, Casinos, TwinSpires, Big Fish Games, Inc., and Other Investments.
“We rate CHURCHILL DOWNS INC a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company’s strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.”
Year-to-date return: -8%
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Is Mgm Stock A Buy As Macau Casinos Prepare To Reopen
- ADELIA CELLINI LINECKER
- 11:09 AM ET 07/20/2022
MGM Resorts International had rebounded from coronavirus crash lows as vaccines rolled out, but inflation and recession fears have made consumers cautious about discretionary spending. Additionally, stringent rules in China have slowed the full reopening of MGM casinos in Macau. Is MGM stock a buy now? Take a look at MGM Resorts stock’s fundamentals and technicals to find out.
MGM Resorts is a global entertainment company with properties featuring hotels and casinos, conference spaces, restaurants, shops and live entertainment. The MGM portfolio includes 29 properties in the U.S. and Macau, including Bellagio, MGM Grand, Aria and Park MGM.
While MGM has casinos in Macau, most of its revenue is derived from U.S. operations. MGM owns half the casinos on the Vegas Strip as well as several properties in other states, including New Jersey, Maryland and Michigan. Rivals Las Vegas Sands and Wynn Resorts have larger exposure to Macau. As a result, China’s recent crackdown on Macau casinos has had a bigger impact on MGM’s rivals.
On July 11, Macau shuttered all of its casinos for a week for the first time in more than two years in an attempt to dampen the recent surge in cases. A Reuters report citing local government officials says they’re set to reopen on July 23.
Investing In Las Vegas: The Best Casino Stocks
Viva Las Vegas! The City of Sin is back, baby. After a calamitous 2020 and 2021, just like the rest of the world, the USAs most famous gambling destination is once again bringing in cash from all over the world.
Moolah. Dineros. Pesos. Green. Wedge. Cheese. Cash money, baby!
Vegas has got loads of it flowing in the past year. So, how can you get your hands on some of that pie?
Well, there are a few key companies that now own most of Las Vegas biggest casino properties. And, if youve got the bank account to back it up, they might just be taking on more investors.
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How To Buy Casino Stock
Don’t plan your retirement on a roll of the dice.
Gamblers might win a few hands of poker, but the house always comes out on top. The recession hit the gambling industry hard, but recently, it has shown strong signs of recovery. Traders who would rather not risk their money on a turn of the roulette wheel can still take advantage of the industrys growing revival.
Use a free online stock screener such as Yahoo Finance or your stock trading accounts stock screener to evaluate casino stocks. Although a few casinos, such as The Riviera, remain independent and privately owned, most are owned by corporations. For example, Caesars Entertainment Corp. owns Ballys, Caesars Palace and the Flamingo while MGM Mirage owns the Luxor, Circus Circus and Excalibur.
Start by typing the casinos name in the screener search box and click on the stock symbol when it comes up. Click on Key Statistics or somesuch to bring up the companys financial information. Check to see if the stock price is trading at the high or low, or if the price is trending up or down. Pay attention to the companys profit history, and compare the current profit to the amount of debt the company carries. Click on Competitors to bring up a side-by-side comparison of the casinos competitors to help find the strongest stocks.
Visit performance for information about the performance numbers displayed above.
How To Buy Casino Stocks
Sign up with an online broker or platform to invest in one or more of these casino stocks.
The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
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Know The End Customer That Will Drive Demand
Companies have very different demand drivers, depending on where they are located geographically and how they fit into the supply chain.
In Las Vegas, gambling and noncasino revenue is driven by tourists who visit from around the U.S. and the world. There are high rollers that help any given resort, but overall it’s the 40 million visitors to Las Vegas each year that keep the city running. In that sense, the overall economic condition of the U.S. is particularly important for casino owners. If a recession hits, as it did in 2008, the entire industry can fall on hard times.
Across the Pacific Ocean in Macau, the . Two-thirds of the region’s gambling revenue comes from VIP baccarat tables, which creates a market that can ebb and flow very quickly. Las Vegas and Macau are serving customers with entertainment and gambling, but they’re often serving very different customers.
Casino suppliers, on the other hand, are selling to the casino operators themselves, so their incentive is in seeing gambling expand around the world. They’ve ridden a wave of new casinos in Asia and the U.S. over the last two decades, and that’s helped them grow.
REITs make most of their income from rent payments from casino operators, but those rent rates are sometimes tied to revenue growth at the casino. Over the long term, their incentive is to see casinos be successful, even if they aren’t taking the bets themselves.
Casino Stocks To Buy: Las Vegas Sands
When it comes to premium casino stocks to buy, Las Vegas Sands often tops several lists. With luxurious properties in the major gambling meccas of the world under its belt, LVS stock is an easy buy for those who want serious exposure to this market.
To be fair, LVS stock hasnt exactly earned its lofty reputation from its market performance in recent years. For instance, if you compare the trailing five-year period, Las Vegas Sands shares are basically flat. However, I think this is also appealing for those who have a contrarian mindset.
Recall above that analysts expect the Macau gambling sector to rebound. If so, this will have a material impact on LVS stock: The underlying company owns several properties there. And while youre waiting for this narrative to play out, LVS offers a generous 4.7% dividend yield.
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Casino Stocks Are The New Dividend Kings
Let’s end with the most dramatic shift in casino stocks since 2010: the introduction of dividends. For decades, casino companies would literally bet their futures to build new multibillion-dollar resorts, stretching every dollar they could to build bigger and better properties. That’s what built the Las Vegas Strip, Macau, and Singapore into the markets we know today. But the building boom has slowed, and the money from existing resorts keeps coming in, leaving some companies flush with cash.
Las Vegas Sands, Wynn Resorts, MGM Resorts, and Melco Resorts are four of the biggest names to start paying dividends. Given their cash flows each quarter, they are arguably some of the best dividend stocks on the market.
Investors may not come to the casino industry for dividends, but large quarterly payouts make a fine reason to stick with some of these stocks for the long term.
This article was originally published on Fool.com
Mgm Sells Mirage Buys Cosmopolitan
In December, MGM and Hard Rock International inked a deal for $1.08 billion for The Mirage, ending MGM’s 21-year ownership of the Las Vegas Strip iconic property.
But MGM is still invested heavily in Las Vegas. On Sept. 27, 2021, MGM Resorts reported it had signed a deal to buy The Cosmopolitan of Las Vegas for $1.6 billion from Blackstone. The transaction separates ownership of the property from the hotel and casino operations, which are being sold to MGM Resorts.
Following the close of the deal, MGM Resorts will enter into a 30-year lease agreement, with three 10-year renewal options, with a partnership that includes the Blackstone Real Estate Income Trust, which will acquire The Cosmopolitan’s real estate assets.
Before the pandemic, in the trailing 12 months ended Feb. 29, 2020, The Cosmopolitan generated $959 million of net revenue and $316 million of adjusted earnings. In the second quarter ended June 30, 2021, the property generated $234 million of net revenue and $92 million of adjusted earnings.
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Sinfully Good Casino Stocks That Could Win The Jackpot In 2020
A change in global gambling sentiment could mean the whole industry strikes it rich
Representing one of the oldest vices in human civilization, casinos have always tempted people with their get-rich-quick allure. Naturally, it doesnt take much to interest speculative investors toward casino stocks to buy. However, the impact from the still ongoing U.S.-China trade war has taken the wind out of this sectors international market.
Still, multiple reasons exist why 2020 could see a sentiment resurgence in casino stocks. First, gambling experts believe that Macau may enjoy a rebound next year. Although Las Vegas receives the notoriety of the gambling image and probably will forever Macau is home to the industrys richest hub. Analysts predict that well see a return of mass market gambling, which is less directly affected from trade war issues than VIP gamblers.
Second, our own economy and labor market is, at least on print, robust. Primarily, consider the November 2019 jobs report, which produced non-farm payrolls of 266,000, far exceeding the 187,000 that economists expected. Combined with near record-low unemployment, theoretically, Americans have both the money and the time to gamble.
To add to that point, President Donald Trumps public opinion polls have routinely soured. In order to win reelection, he must implement policies that keep the economy going. Logically, this is a net positive for casino stocks to buy.