3 Top Casino Stocks That Could Make a Comeback in 2022
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Over the past year, casino stocks have been devastated by the novel coronavirus pandemic. Just take a look at some of the losses a handful of major players in the sector have seen:
- Las Vegas Sands (NYSE:LVS) fell from a January 2020 high of $74.29 to now sitting at $35
- Wynn Resorts (NASDAQ:WYNN) fell from $153.41 in January 2020 to $82.15 now
- Penn National Gaming (NASDAQ:PENN) fell from about $142 in March 2021 to its current price of $48
- Caesars Entertainment (NASDAQ:CZR) recently fell from its high near $120 to $86.60
However, now may be the best time for investors to start rolling the dice on battered casino stocks again.
After being pummeled by the pandemic, and a potential crackdown on gambling in China, the industry is showing signs of life again. In fact, according to the American Gaming Association (AGA), commercial gaming revenue hit a record high of $13.89 billion in the third quarter. Additionally, the AGA said that its $38.67 billion in revenue generated in the first nine months of 2021 is already above the revenue generated in all of 2020.
So, with that in mind, investors may want to consider casino stocks like this trio for their portfolios in the coming year.
Now, let’s dive in and take a closer too at each one.
Top Casino Stocks to Consider: MGM Resorts International (MGM)
Beaten down shares of MGM Resorts are sitting at key support levels dating back to August. In turn, the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD) and Williams’ %R are starting to pivot higher from oversold conditions as well.
With patience, I’d like to see the MGM stock challenge its recent high of around $51.17 a share. Furthermore, while MGM was knocked down on Macau concerns, we have to remember that the casino has “comparatively lower exposure to Macau.”
loss of $100 million in the third quarter of 2021, MGM does expect to see sales of at least $6 billion.
Lastly, in its most recent quarter, MGM posted net revenues of $2.7 billion — an increase of 140% year-over-year (YOY). Operating income was $1.9 billion compared to operating loss of $495 million during the same time last year. Also, net income was $1.4 billion, as compared to a year-earlier loss of $535 million.
Caesars Entertainment (CZR)
As things stand now, I’d also use weakness in Caesars Entertainment as a buying opportunity. Why? Well, let’s take a closer look.
Not only is CZR stock sitting at triple bottom support dating back to March, but RSI, MACD, and Williams’ %R are also all deep in oversold territory. Betting on a rebound, I’d like to see the CZR stock challenge prior resistance around $120 again, near-term.
Even B. Riley analyst David Bain says CZR stock is undervalued. He now has a “buy” rating on the stock with a price target of $191. He added, “the operator’s regional portfolio remains solid and Las Vegas remains a source of strength for the company,”
Additionally, earnings haven’t been too shabby either. In the third quarter of 2021, the company posted GAAP net revenues of $2.7 billion, as compared to $1.4 billion during Q3 of 2020. It also posted a GAAP net loss of $233 million, which is way better YOY than a net loss of $926 million. Furthermore, occupancy rates are higher, too. Additionally, for “the second half of 2021 and into 2022, Caesars remains optimistic, expecting groups to begin returning to Las Vegas in force.”
Top Casino Stocks to Consider: VanEck Gaming ETF (BJK)
Another great way to trade the rebound in casino stocks is with an exchange-traded fund (ETF) like the VanEck Gaming ETF. With an expense ratio of 0.92%, the ETF offers greater diversification at less cost. At the moment, BJK trades around $41.3o per share, and offers exposure to top casino stocks, such as Penn National Gaming, Wynn Resorts, Las Vegas Sands, MGM Resorts International, Caesars Entertainment and Churchill Downs (NASDAQ:CHDN), for example.
If I were to buy 100 shares of the BJK ETF, it would cost me just over $4,100. If I were to buy just 100 shares of MGM at $40.74, it would cost me $4,074 just for that one stock. Therefore, with the ETF, I can pay $4,100 and gain exposure to MGM and dozens of other related stocks at the same time.
On the date of publication, Ian Cooper 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.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
