It used to be thought that gambling was largely immune to economic downturns. But except for sales of lottery tickets, the Great Recession proved that to be very wrong, indeed — especially when it comes to casino stocks.
Flying off to Vegas and booking a hotel room is about as discretionary a purchase as you can make, so there’s little wonder that shares of MGM Resorts International (NYSE:MGM), which fetched north of $80 at the end of 2007, go for about $11 today.
MGM Resorts International
Las Vegas, Nev.
Casinos & Gaming
However, that is up a far cry from a bear-market bottom of about $1.89 hit back in 2009, and as the industry fitfully comes back to life, MGM is just about the purest big-name play on the U.S. market.
Sure, the company has a 51% stake in a joint venture that operates an MGM resort in Macau, the Chinese gambling mega-Mecca. However, most of MGM is spread throughout the U.S.
The company, which employs more than 50,000 people, boasts well-known locations in its Vegas hometown like the Bellagio, MGM Grand, Mandalay Bay and the Mirage. But it also operates 15 other properties in states as far flung as Mississippi and Michigan.
After a strong rebound in visitors and revenue since the depths of the recession, Vegas did stall a bit by mid-year, as slower job growth and weaker consumer confidence made folks and businesses rethink vacation and convention plans.
But just remember this: As the economy goes, so goes MGM. If you’re bullish on America, you have to be bullish on the casino companies.
Check out the complete list of Real America Index components, along with an interactive map of short-term and long-term returns.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.