Investors looking for a sector to jump into may have one to assess right now. Casino stocks are hot, with some of the top names in the market today being Wynn Resorts (NASDAQ:WYNN), MGM Resorts (NYSE:MGM) and Las Vegas Sands (NYSE:LVS).
Shares of these three major casino operators have surged between 3.5% and 7% at the time of writing, with Wynn’s 7% move leading the way.
WYNN stock jumped on a major upgrade from a Barclays analyst who suggested the stock could have 30% upside over the next year. Investors considering this upside should also note that Wynn’s stock price has surged nearly 30% this year already, suggesting it has momentum going forward.
There are various reasons for this upgrade. Analysts believe that Wynn and its peers could benefit from a continued resurgence of activity in Las Vegas and Macau. This could lead to higher EBITDA generation than previously thought, with these casino stocks likely seeing greatly improved numbers.
With that said, let’s dive into whether investors should be jumping on these gambling plays right now.
Can This Surge in Casino Stocks Continue?
Analyst commentary around Wynn and other casino stocks is certainly encouraging. Indeed, it appears that consumers aren’t yet pulling back on entertainment spending. And while gambling can be an expensive form of entertainment, it appears Wall Street isn’t too worried.
Wynn’s previous results were strong, with the company reporting more than $600 million in operating revenue in Macau, the highest number since 2019. Comparatively, MGM saw a 140% jump in revenue from China on a year-over-year basis, with Las Vegas Sands reporting a roughly 100% increase.
As the Chinese economy reopens and the U.S. economy continues to remain stable, these casino stocks appear to have continued runway for growth. Personally, I think macroeconomic headwinds could be a major factor for investors to price into these stocks. But until anything changes, these casino operators are likely to remain in high demand. Thus, investors may want to keep these stocks on the watch list for now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
