3 Casino Stocks to Buy as Focus Shifts to Domestic Travel
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With frustrations associated with the novel coronavirus reaching a fever pitch, myriad households are ready to abandon their facemasks for some fun in the sun. As several mainstream publications have reported, the concept of revenge travel — or consumers opening their wallets to make up for lost experiences — has spiked in popularity. But the beneficiaries of this dynamic could end up mostly being domestically focused casino stocks to buy.
How so? While many people are undoubtedly ready to jet off to faraway lands, the reality is that every country has its own distinct Covid-19 protocol. Some nations have blocked off foreign tourists with few exceptions. Even among international jurisdictions that are more welcoming, the fast-spreading subvariant of the omicron strain could impact long-distance travel, cynically bolstering domestic casino stocks.
In addition, investors must be aware of the economic impact on summer vacation plans. For several months, Americans have been suffering from rising inflation. But this situation is itself a pandemic, with the European region for instance also suffering from steep cost spikes. While any kind of travel is going to be expensive due to ridiculous energy bills, it’s more palatable for many households to stay closer to home.
To be fair, travel-related investments represent an aggressive risk-reward profile. But if you’ve got the stomach for speculation, these are some of the casino stocks to consider.
Casino Stocks to Buy: MGM Resorts (MGM)
One of the most iconic names among casino stocks, MGM Resorts (NYSE:MGM) is in prime position to soak up travel demand. A centerpiece of Las Vegas, Sin City is gradually starting to recover from the utter devastation of the Covid-19 pandemic. For example, in February 2022, the Las Vegas Convention and Visitors Authority noted that visitor volume hit 2.6 million, up nearly 70% year-over-year (YOY).
Invariably, that’s going to help Vegas-centric casino stocks. And it’s more than possible that internationally recognized brands like MGM Resorts will enjoy a disproportionately high demand allocation. In addition, MGM stands to gain from per-room profitability metrics. Throughout Sin City, the average daily rate for hotel occupancy jumped 15% — against pre-pandemic norms.
Of course, the risk is that if inflation worsens, MGM could be due for a correction. Nevertheless, the company’s prime location near economic powerhouse California might make up for this risk, making MGM one of the casino stocks to keep on your radar.
Century Casinos (CNTY)
While Las Vegas is undoubtedly the prime location for casino stocks, a 2016 article from Business Insider gave investors some much-needed perspective. In it, the authors argued that half of the U.S. population lives in just nine states. Of course, California is one of them — but it was the only one on the west coast. And that segues into Century Casinos (NASDAQ:CNTY).
No, Century doesn’t have the brand power of MGM. What it does have, though, is diversity. Yes, it has diversity of people but what I’m referring to is diverse locations. From its headquartered state of Colorado, Century covers West Virginia, Missouri and the western Canadian province of Alberta. In fact, it also has casinos in Poland just for good measure.
Considering that airfare for both international and domestic routes are rising, it makes sense that consumers will want to change their travel plans to areas closer to home. In turn, Century is able to accommodate as it’s concentrated in the middle and eastern regions of the U.S. So, with all of this in mind, investors might consider CNTY stock among the top casino stocks to buy.
Casino Stocks to Buy: Scientific Games (SGMS)
As the name might suggest, Scientific Games (NASDAQ:SGMS) is not a direct player in attracting travel demand. Nevertheless, the company undergirds myriad casino stocks to buy. That’s because SGMS, per its website, is the “global leader in lottery games, sports betting and technology, and the trusted partner of choice for government lotteries.”
Chances are, if you’ve ever engaged in contests of chance, you’ve interacted with Scientific Games. And that translates to potential downwind benefits for SGMS stock.
Essentially, as people balk at high prices and international Covid restrictions, they’re going to be attracted with what resorts and casinos have to offer. If I’m being cynical, I’d also say that possible recessionary pressures could bring more people to the lottery table.
Finally, Scientific Games also features a footprint throughout North America, along with Europe and Asia Pacific. Therefore, it’s probably one of the more balanced ideas among the generally speculative casino stocks to buy.
On the date of publication, Josh Enomoto 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.
