Restrictions on travel and the novel coronavirus-induced market slowdown have had a crippling effect on casino stocks in the past year. So much was expected from the casino business, with several new states approving gaming statutes and the popularity of iGaming.
However, the approval of the vaccine and the resultant economic turnaround should boost casino stocks in 2021. In fact, investor sentiment is already improving, with a 3-month gain of about 20% for the VanEck Vectors Gaming ETF (NASDAQ:BJK)
Additionally, visitors are expected to pick up at a steady pace in the first few months of the year. And widespread adoption of the vaccine could bode well for a significant increase in activity in the second half of the year. Moreover, the White House transition should give investors more confidence about casino stocks with exposure to China.
With all of that in mind, let’s look at three casino stocks that could make a comeback this year:
Now, let’s dive in and take a closer look at each one.
Casino Stocks to Buy: Wynn Resorts (WYNN)
Wynn Resorts has had it had incredibly tough during the pandemic, as it relied mainly on revenues generated from brick-and-mortar casinos. It has finally made its long-awaited entry into the online gaming market with its app called WynnBet. Moreover, with its operations weighted toward Macao, WYNN stock could witness a quicker recovery than its peers.
The company witnessed a double-digit reduction in revenues in the past three quarters. However, gaming revenue overall is picking up nicely in Macau, with a 228% increase in revenues in October last year. That said, Wynn Resorts has significant exposure towards the Chinese gaming capital, which will play a huge role in its recovery. Widespread adoption of the vaccine should lead to an increase in domestic foot traffic to Wynn’s resorts. Moreover, it is also expanding WynnBet’s presence to several new states to compete with the big fishes in the iGaming world.
MGM Resorts (MGM)
MGM Resorts boasts one of the largest integrated casino, hotel and entertainment resort portfolios globally. It is a critical player in the domestic market with a Las Vegas strip-heavy portfolio and a strong presence in several states. It has been in the news lately, with its $11 billion buyout bid for UK-based sports betting platform Entain. The deal has fallen through, but even without it, MGM stock has several catalysts that will continue to push it higher in 2021.
The going has been understandably tough for MGM, but its third-quarter results show a 280% increase in revenues sequentially. Foot traffic should continue to increase in the coming months, further boosting revenues. BetMGM, its online sports-betting platform, currently has 17% of the industry’s market share with heaps of potential. UBS analyst Robin Farley feels that the platform could include 38 states by 2025, with a roughly $20 billion market value.
Therefore, MGM’s investors have a lot to look forward to. And its stock price should rise considerably in the coming months.
Casino Stocks to Buy: Las Vegas Sands (LVS)
87-year-old Las Vegas Sands founder and CEO Sheldon Adelson breathed his last this month, one of the biggest losses for the gaming industry. He leaves behind a financially robust company with a sizeable cash balance and multiple tail-winds for massive growth this year. With the vaccine’s approval and higher gaming revenues from Macao, LVS stock is up roughly 4% in the past three months.
Earning results for the company have been lackluster in 2020, but analysts expect a huge bump in revenues in soon. A lot of it is down to the increase in Macao’s gaming revenues and the steady recovery in domestic demand. The company will be investing heavily in Marina Bay Sands Singapore and Macao in the next couple of years. Moreover, the new management under acting CEO Robert G. Goldstein will be focusing more on making massive inroads in the online sports gaming business.
Thus, expect Las Vegas Sands to explore new growth opportunities in the coming year and beyond.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.